US Gas Prices Poised for Sharp Increase as OPEC+ Cuts Production by 1.6 Million Barrels a Day
The Organization of the Petroleum Exporting Countries (OPEC+) has made a surprise move to slash oil production, which will soon be felt at US gas pumps. The group announced on Sunday that it would cut its oil output by more than 1.6 million barrels per day starting in May and continuing through the end of the year.
As a result of this move, global Brent crude futures jumped about 6% in trading on Monday, while US WTI benchmarks also rose sharply. The increase had an immediate impact on gasoline futures, which will be passed on to US drivers relatively quickly, causing wholesale prices to rise by around 8 cents per gallon, or approximately 3%.
According to Tom Kloza, global head of energy analysis for OPIS, OPEC's decision is set to rekindle the "inflation monster" and has left the White House "shocked and major-time pissed." The US national average gas price currently stands at $3.51, with Kloza predicting it could reach as high as $3.80-$3.90 in a short period.
Kloza is cautiously optimistic that prices won't exceed $4 per gallon but believes they may surpass $5 once again by the end of summer if there's another disruption to oil production along the Gulf Coast, potentially triggered by hurricanes.
Interestingly, gas prices had already been below pre-pandemic levels when Russia invaded Ukraine in February 2022. The subsequent surge in prices, which peaked at a record $5.02 per gallon on June 14, was largely driven by global market tensions and supply chain disruptions.
Despite OPEC's ability to cut production, Kloza notes that the US has made significant strides in increasing its oil production and refining capacity, with additional releases from the Strategic Petroleum Reserve also helping to stabilize prices.
The new production cuts are seen as a motivated move by OPEC+, which has been exploring ways to stabilize the global energy market amid rising demand and supply chain disruptions.
The Organization of the Petroleum Exporting Countries (OPEC+) has made a surprise move to slash oil production, which will soon be felt at US gas pumps. The group announced on Sunday that it would cut its oil output by more than 1.6 million barrels per day starting in May and continuing through the end of the year.
As a result of this move, global Brent crude futures jumped about 6% in trading on Monday, while US WTI benchmarks also rose sharply. The increase had an immediate impact on gasoline futures, which will be passed on to US drivers relatively quickly, causing wholesale prices to rise by around 8 cents per gallon, or approximately 3%.
According to Tom Kloza, global head of energy analysis for OPIS, OPEC's decision is set to rekindle the "inflation monster" and has left the White House "shocked and major-time pissed." The US national average gas price currently stands at $3.51, with Kloza predicting it could reach as high as $3.80-$3.90 in a short period.
Kloza is cautiously optimistic that prices won't exceed $4 per gallon but believes they may surpass $5 once again by the end of summer if there's another disruption to oil production along the Gulf Coast, potentially triggered by hurricanes.
Interestingly, gas prices had already been below pre-pandemic levels when Russia invaded Ukraine in February 2022. The subsequent surge in prices, which peaked at a record $5.02 per gallon on June 14, was largely driven by global market tensions and supply chain disruptions.
Despite OPEC's ability to cut production, Kloza notes that the US has made significant strides in increasing its oil production and refining capacity, with additional releases from the Strategic Petroleum Reserve also helping to stabilize prices.
The new production cuts are seen as a motivated move by OPEC+, which has been exploring ways to stabilize the global energy market amid rising demand and supply chain disruptions.
think opec+ is just tryin 2 screw americans over 
theyre gonna raise gas prices again and ppl will be all like "what r u doin" 
but honestly, i dont think its the opec+'s fault, its us americans who love our trucks and SUVs that are suckin up all the gas 
we should be lookin at ourselves instead of blaming the oil cartel 
i'm so not a fan of these sharp increases... $3.80-$4.00 per gallon is still pretty steep for me... what's good though is that the US has been working hard to boost its oil production, maybe we can finally see some stability in the market? 
but ugh, hurricane season is just around the corner and i'm really hoping those big storms don't come through the gulf coast again 
just thinking about this opec+ cut and how it's gonna affect gas prices in the us... i was like under $3 a gallon last year but now $3.80-$3.90 seems crazy 
also kinda interesting that we're already seeing a rise after the announcement... hope everyone is prepared for some big price jumps soon 
. I mean, sure, they might be up to $3.80 or even $4 per gallon, but think of it this way - we're living in a time where the economy is growing, inflation is relatively low (compared to some other countries), and people are finally able to enjoy some good old-fashioned American road trips 
Those were crazy times! And you know what? We made it out just fine on our bicycles and whatnot 
. I'm sure we can handle a little price hike for gas 
this time its gonna affect us bigtime 
i heard it might reach $4 soon and then who knows maybe $5? 
anyway, i think it's good that opec+ is trying to stabilize the market but like tom kloza said its still a bit of a gamble 
or what if production cuts dont actually work? 
i mean, i get it, oil production and all that, but can't we just have a break from price hikes for once? 
and lets be real we had super cheap gas pre pandemic lol 
US gas prices are about to go up and I was really hoping we were out of that financial struggle 
especially with summer coming up and hurracanes brewing 
. Maybe this is a good thing for everyone else, but not for me and my tight budget 
... $3.51 is way more manageable than what we're seeing now 
.
$3.51 to $4 or maybe even higher 
the formatting is all over the place, no clear headings or transitions... i mean, come on, guys! let's get our facts in order 
. if there are any hurricanes or whatever, watch out for those prices to skyrocket even more 
.
️. With US gas prices poised for a sharp increase, I worry about the impact on consumer spending and the overall economy. The fact that the White House is "shocked and major-time pissed" suggests that there's concern about the potential knock-on effects 
. On one hand, it's a surprise move and will definitely raise eyebrows in DC