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Oil producers’ cuts could boost gasoline prices, help Russia

By DAVID McHUGH2 hours ago

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FILE – People queue with their cars at a gas station in Frankfurt, Germany, on Aug. 31, 2022, the last day when the government’s fuel prize discount is in effect. Major oil-producing countries led by Saudi Arabia and Russia have said they’re throttling back supplies of crude — again. And this time, the decision to cut back was a surprise that is underlining worries about where the global economy might be headed. (AP Photo/Michael Probst, File)

FRANKFURT, Germany (AP) — Major oil-producing countries led by Saudi Arabia said they’re cutting supplies of crude — again. This time, the decision was a surprise and is underlining worries about where the global economy might be headed.

Russia is joining in by extending its own cuts for the rest of the year. In theory, less oil flowing to refineries should mean higher gasoline prices for drivers and could boost the inflation hitting the U.S. and Europe. And that may also help Russia weather Western sanctions over its invasion of Ukraine at the expense of the U.S.

The decision by oil producers, many of them in the OPEC oil cartel, to cut production by more than 1 million barrels a day comes after prices for international benchmark crude slumped amid a slowing global economy that needs less fuel for travel and industry.

It adds to a cut of 2 million barrels per day announced in October. Between the two cuts, that’s about 3% of the world’s oil supply.

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Here are key things to know about the cutbacks:

WHY ARE OIL PRODUCERS CUTTING BACK?

Saudi Arabia, OPEC’s dominant member, said Sunday that the move is “precautionary” to avoid a deeper slide in oil prices.

Saudi Energy Minister Abdulaziz bin Salman has consistently taken a cautious approach to future demand and favored being proactive in adjusting supply ahead of a possible downturn in oil needs.