Gas prices and global inflation are likely to tick higher again as the OPEC+ group of oil producing countries will hold production at nine million barrels a day for the rest of the year.

On Tuesday, Saudi Arabia announced it would maintain its production cut of one million barrels a day until December.

This maintains the country’s output at nine million barrels a day, the lowest amount in several years. Russia has also confirmed it would maintain its own cutback of 300,000 barrels a day for the same period.

In essence, OPEC+ is ramping up gas price pain, triggering fresh and increasing concerns about rising global inflation - which was just beginning to ease - meaning central banks could possibly push higher-for-longer interest rates.

Restricted oil supply leads to higher oil prices, which, in turn, can contribute to higher fuel prices for consumers and businesses, putting upward pressure on overall inflation.

Higher energy costs also lead to increased production costs for companies, which are typically passed on to consumers in the form of higher prices for goods and services, again contributing to inflationary pressures.

Consumer behavior also plays a role. When fuel prices rise, consumers may cut back on discretionary spending, which can impact economic activity. Reduced consumer spending can influence inflation dynamics, especially in sectors heavily dependent on consumer demand.

This move by OPEC+ will, of course, be considered by central banks when formulating monetary policy.

If rising oil prices are expected to have a sustained impact on inflation, central banks can be expected to maintain higher interest rates for longer to control soaring prices.

The decision by the group of oil producing countries will further exacerbate the cost-of-living and cost-of-business crisis as inflation is given another global boost.
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London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.