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OPEC in “surprise” cut in global oil production

5 April 2023

Last week, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) – which consists of Saudi Arabia, Russia, Iraq, the United Arab Emirates and other oil producers – announced plans to slash oil production by almost 1.2 million barrels per day.

This decision is likely to hit vulnerable consumers hard, increasing prices at the pump, driving further inflation and raising the cost of living.

"It came as a complete surprise, because Saudi Arabia had said recently that its production quotas would remain in place for the rest of the year,” one energy expert commented.

But according to Bloomberg, such shocks will remain a fact of life – as long as the world relies on a handful of countriesfor a commodity as critical as energy.

Australia's energy security is particularly vulnerable. We import 90 per cent of our refined fuel, most of which originates in the Middle East (even if we buy it from Asia).

The silver lining? 

Surging fossil fuel costs are a powerful incentive to switch over to a green energy, which – in contrast – is getting cheaper. That's why Fortescue announced last year that it will eliminate fossil fuels from its mining sites by 2030, thus reducing risk exposure and increasing profits.