China, Russia And Saudi Arabia Finally Set To CRUSH The UK And US Economy
#china #us #oil
The Organization of the Petroleum Exporting Countries and its allies, which included Russia, decided to reduce oil output by 2 million barrels per day on October 5.
There are enough barrels to fulfill 2% of the world's need for oil. And the effects on economies in the United States, the United Kingdom, and the world may be devastating.
Now, with the United States and the United Kingdom already on the verge of a recession, this oil price surge might exacerbate their already dire economic situations.
That's why the US is countering with a "no big bill," as it's being termed. In addition, the government of the United Kingdom has instituted a policy known as "price capping."
In a nutshell, the destiny of the global economy in 2023 rests on the outcome of an oil war involving Russia, the Middle East, and the West. And this shows that they are prepared to crush the US, UK, and global economies in 2023.
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In the most basic terms, OPEC refers to the group of countries that export the most crude oil. Iran, Iraq, Kuwait, Saudi Arabia, Qatar, the United Arab Emirates, and ten more nations are part of this bloc producing oil.
In 2016, several additional nations, including those in Russia, joined OPEC to establish what is now known as the OPEC Plus group.
And more over half of the world's oil exports currently come from this coalition. The question now is why and how OPEC+ will benefit from reducing oil output.
They are the root of the problem known as the supply-and-demand mismatch.
Let's use an example oil requirement of 200 barrels to illustrate. If there are four oil-producing countries, the price per barrel will be $30, and each country will pump out 50 barrels.
So, $1,500 was being made in profit by each nation. So what would happen if one of these nations consciously reduced the supply from $50 to $10?
Still, 200 barrels are needed, but only 60 are available.
Now, the other three nations could make up for the shortfall in oil production, but they have decided not to. The reason is that they can make $60 a barrel off of oil sales currently.
So, they'll still sell 50 barrels, but now they'll make $3,000 instead. And that's more money in your pocket even if you're distributing the same amount of oil.
Now, if all nations cut production by just 10 barrels, they could raise the price to $70 per barrel once more. In the end, even if they produce less oil, they might still make $ 2,800 apiece.
Because of this, changes in OPEC's oil output have far-reaching consequences.
This is how normal folks like you and me are affected by the price of oil and the quantity produced.
This is why OPEC+ has reduced output by 2% at this time. This is just another way the OPEC+ group exploits the world economy to extend its control over oil supplies.
USA and EUROPE PROBLEM
The United States faces difficulties in this area for three different causes.
For starters, the situation in Europe is deteriorating and will continue to do so over the coming months.
So, if energy prices rise, the government will have to increase its borrowing, leading to the issuance of additional bonds on the market. And since bonds would be in lower demand, this would cause bond interest rates to rise.
This causes investors to become pessimistic, which lowers the value of the currency and raises energy prices.
However, this time it's not just because of Russia or a currency devaluation. It's also because OPEC+ has cut oil production, driving up prices.
Second, with US inflation reaching 8.3%, the United States is already experiencing a cost of living issue. Furthermore, this is the greatest inflation rate recorded in the last four decades.
Now, if you look at the big picture, you can see that the rising cost of oil is a key reason why the economy is contracting, which has everyone scared. They are raising oil costs, which will only hurt the economy further and prolong the slump.
The third reason is that a rise in the price of oil offers Russia more money to invest in the war. And this is why the United States is having trouble again.
Russia made more money after the war because of these pricing increases. In fact, the average annual revenue of Russia from Europe in oil and gas from March to July is close to $50 billion.
However, by 2022, this sum has quadrupled to almost $90 billion. This is why the US is moving forward with the NOPEC Bill.
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