Opec cuts output to boost oil prices – and gives interest rate setters a headache

A sudden and sharp rise in Brent crude is the last thing central banks need, writes James Moore

The impact at the pumps will be felt sooner rather than later given the way forecourt prices move much faster when oil prices are trending higher (AP)

As if those charged with setting interest rates didn’t have enough to worry about, along comes Opec with a red-hot habanero to throw into a dish they hoped had been cooling.

Voluntary production cuts have been agreed among some of the cartel’s biggest producers with the aim of reducing output by 1.16 million barrels of oil a day; that represents a little over 1 per cent of global production but it was enough to trigger a 5 per cent surge in Brent crude prices.

Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, Oman and Algeria are all on board with cuts, which are intended to last from May until the end of the year. Russia has also announced its own measures.