OPEC+ did it again last week. It showed the world that it oversees oil prices, which is bad news for consumers worldwide.

The petroleum organization, controlled by Saudi Arabia and co, including Russia, surprised markets by cutting oil output by more than one million BPD, sharply increasing oil prices.

OPEC+'s output cut comes when China is reopening, and summer traveling is around the corner, raising the prospect of another round of cost-push inflation at home and abroad.

"OPEC's decision to cut its production of oil by 1.2 million barrels per day, and Russia's decision to do broadly the same, will undoubtedly have an impact on inflation across the world, particularly in Europe," Oliver Rust, head of product at independent inflation data aggregator Truflation, told International Business Times.

"While some point to political motivations, and they might be right in the case of Russia, it is largely a financial decision from the oil cartel," Rust explained. "Oil prices are falling, and oil-producing nations want to stop that. We are already seeing the price of Brent crude rising, which will quickly impact the U.S."

Saudi Arabia's and Russia's power to set oil prices may have surprised some, as the U.S, not Saudi Arabia, is the world's largest oil producer these days. It can expand oil output to counter OPEC's moves. But isn't willing to do so, letting OPEC set the game's rules.

Juscelino Colares, a business law professor at Case Western Reserve University, blames Biden's energy policies for continuing to give OPEC + more market control than it has had in over a decade. However, we are not fighting Gulf Wars right now!

"By insisting on the worst anti-fossil fuel regulatory policies and creating the worst energy development investment environment ever, Biden's policies, combined with the maturity of U.S. shale resources--whose output has been declining for some time--have been giving Saudi Arabia and its OPEC friends (including Russia) the freedom to dictate prices," he told IBT.

But Roberta Caselli, Commodities Research Analyst at Global X ETFs, sees things differently. She believes Opec+'s decision to cut supply reflects concerns over demand weakness ahead due to the recent turmoil in the U.S. and European banking system. "Despite the recent decrease in gas prices easing recession concerns, members of Opec+ might be worried about the impact of a potential economic downturn on oil demand. As a result, the group described the reduction as 'precautionary,'" she told IBT.

Still, rising oil prices could spoil the efforts of the Federal Reserve and other central banks worldwide to restrain price hikes and relieve consumers who have seen their income squeezed by the old villain.

"Energy prices--oil being a big part--will test the markets newly found forecast of later-in-the-year interest-rate reductions, based on ever lower GDP forecasts and a looming debt- and unemployment-fueled recession," Professor Colares said. "When oil price inflation comes in the mix, will expectations of rate declines be shown to have been premature, as the Fed's hand is forced to react to resurging inflation pressures in the next few months? We don't know the answer to these questions, but the latest supply cut is bad news for U.S. consumers and investors."

Caselli sees the renewed inflation pressures of primary significance for monetary policy," too. "Although investors had hoped that central banks might pause the current tightening cycle because of reducing price pressures, this development complicates the outlook for inflation and interest rates," she explained. "An increase in the price of oil could make it harder for central banks to control inflation, leading to further potential increases in interest rates."

Still, Caselli expects the oil market to tighten in the coming quarters due to renewed supply risks and increased demand from China's reopening, despite a lingering economic slowdown in the U.S. and Europe.

Meanwhile, Professor Colares doesn't see relief in the offing from the U.S policy side. "Yet, do not expect any actionable answer from current U.S. leadership, just some cursing the Saudis and aspirational calls for further commitment to "green"-energy-"independence"-in-a-decade-or-soTM," he said. "When all this leadership enjoys retirement, we pay the bills for their regulatory policy and geopolitical boondoggles."

With a futures contract expiring traders didn't want to take delivery of oil they would have to pay dearly to store and the price went into negative territory
With a futures contract expiring traders didn't want to take delivery of oil they would have to pay dearly to store and the price went into negative territory. This is a representative photo. AFP / Apu GOMES