Oil production cut by OPEC+ nations: Impact on fuel prices, explained

Oil production cut by OPEC+ nations: Impact on fuel prices, explained

Dubai: After a surprise announcement last weekend that the world’s major oil-producing countries would cut their output of crude oil, many would have wondered how this move would impact fuel prices worldwide. Let’s look at how such a collaborative global decision can affect your finances. The group of countries, referred to as ‘Organisation of the Petroleum Exporting Countries’ or ‘OPEC’, announced it would cut oil production starting May, running through the end of the year. The price of ‘Brent’ crude, the international oil standard, jumped 6 per cent or $5 (Dh18) to $85 (Dh312) for a barrel following the news. “When oil production is collectively cut, globally, motorists can evidently expect prices at fuel pumps to rise, but the severity of the price impact is felt differently by countries worldwide,” explained Ahmed Ghazi, a commodities analyst and industry researcher based in Abu Dhabi. “This is because not every country has crude oil. And as it’s vital for every economy, many import crude oil. Given refineries that process crude oil are often located in a different country than where the crude oil is produced, countries also have to import oil for refineries at an additional cost.” So the price of fuel