Recession odds, inflation fears rise as US-Saudi oil pact breaks down

Recession odds, inflation fears rise as US-Saudi oil pact breaks down

Just three years ago, when OPEC+ oil giants fell out, the US found itself playing the role of peacemaker. Now it looks more like their target.

The Saudi-Russia oil alliance has the potential to cause all kinds of trouble for the US economy — and even for President Joe Biden’s re-election campaign. This month’s OPEC+ decision to cut crude output, for the second time since Biden flew to Saudi Arabia last summer seeking an increase, may be just the start.

That April 2 announcement, which lifted oil prices by about $5 a barrel, already means recession risks are bigger than they otherwise would have been — because consumers spending more on energy will have less cash left for other stuff — and inflation will be higher. Russian President Vladimir Putin, meanwhile, gets a bigger war-chest to fund his attack on Ukraine.

But more significant is what the OPEC+ move says about the likely path of oil prices over the coming years.

In a world of shifting geopolitical alliances, Saudi Arabia is breaking away from Washington’s orbit. The Saudis set oil production levels in coordination with Russia. When they wanted to ease tensions with regional rival Iran, they turned to China to broker