To The Moon

Oil-producing countries, including Saudi Arabia, Kuwait, and Iraq, have decided to reduce oil production by about 1.6 million barrels per day from May. The decision was unexpected and not typical of the voluntary production cuts agreed upon by OPEC+ countries. The reduction in oil production has caused a surge in oil prices, with Brent crude prices rising by about $5 to around $85 per barrel, and analysts predict that the impact on oil prices will last for a long time.

In my opinion, this sudden production cut by oil-producing countries will once again pose a challenge to the United States, but it will not be as extreme as during the US-Iraq war. The purpose of the production cut is to prepare oil-producing countries for an economic recession. The US is currently facing an uncertain future, particularly after the banking crisis.

The production cut may be a move by OPEC+ and oil-producing countries to avoid the same mistakes made in 2020 when excessive oil production led to a severe oversupply, causing oil prices to drop sharply due to a lack of buyers. This led to OPEC+ implementing a daily production cut of 9 million barrels in response. Moreover, the Ukraine-Russia war in 2022 caused a rapid increase in demand for oil, leading to a rapid surge in oil prices. However, apart from the political tension between Russia and the US, the current production cut by oil-producing countries is a strategic move to prepare for an uncertain future and an economic recession.

The impact on the US will be significant. The US does not support the production cut, but OPEC+ member countries such as Saudi Arabia and Russia may not care about the US's opinion. The most concerning issue for the US is whether inflation will worsen. The daily reduction in oil production of about 1.7 million barrels is slightly lower than 2% of global production. While this may not seem like a significant amount, it will have a significant impact on the overall energy market. The marginal change in supply will have a significant impact on prices, and the most significant effect will be reflected in the next inflation data.

Investors need to be aware of the potential impact of the production cut on oil prices and energy stocks. The reduction in oil production will have a positive impact on energy stocks as the market adjusts to a decrease in supply. However, there is also the possibility of an increase in oil prices, leading to inflationary pressures. As such, investors need to be cautious and keep an eye on any potential inflationary pressures caused by the production cut.

@TigerStars @MaverickTiger @VideoLounge @CaptainTiger @MillionaireTiger @Daily_Discussion