Opec cut amounts to a tax on world consumption

The decision of the Organization of Petroleum Exporting Countries to cut production means that oil prices are set to stay high. This will keep Europe’s consumers spending less and will dim prospects for eurozone recovery.

Why is Opec cutting production? Saudi Arabia is the swing producer in the cartel. The Saudis are worried that the US is considering ditching them as allies in the Middle East. By cutting production, the Saudis are telling the US that it needs them just as much as the Saudis need the Americans.