OPEC+ Sees a Sharp Rise in US Gas Prices as Global Production Cut Looms
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have taken an unexpected step, announcing plans to slash oil production by over 1.6 million barrels per day starting May. This bold move has sent shockwaves through global energy markets, leading to a significant spike in US gas prices.
As of Monday, Brent crude futures surged about 6% and WTI, the US benchmark, saw an equally impressive 6% gain, while gasoline futures shot up around 3%. The immediate impact on the market was swift, with RBOB, the most closely watched wholesale gasoline price, rising by approximately 8 cents per gallon.
Experts predict that US gas prices will continue to rise, potentially reaching levels of $3.80-$3.90 per gallon in a relatively short period. According to Tom Kloza, global head of energy analysis for OPIS, "I think OPEC is reawakening the inflation monster." He attributed this sudden increase to the White House's shock and concern over the impact on the economy.
Currently, US gas prices stand at $3.51 per gallon, just below the $3.53 average price recorded on February 23, 2022 – a day before Russia invaded Ukraine and sent oil prices soaring. While the US plans additional releases from its Strategic Petroleum Reserve and has increased oil production and refining capacity, experts caution that this latest cut by OPEC+ will be challenging to offset.
The significant reduction in global oil supply is seen as a motivating factor for OPEC+, which could potentially lead to a sustained increase in gas prices. Kloza warned that US drivers might not see prices drop back down to $5 per gallon anytime soon, but noted the possibility of prices reaching year-earlier levels by summer, especially if any major storms affect production along the Gulf Coast.
The recent price surge marks a stark contrast to last year's record-breaking highs, which peaked at around $5.02 per gallon in June 2022.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have taken an unexpected step, announcing plans to slash oil production by over 1.6 million barrels per day starting May. This bold move has sent shockwaves through global energy markets, leading to a significant spike in US gas prices.
As of Monday, Brent crude futures surged about 6% and WTI, the US benchmark, saw an equally impressive 6% gain, while gasoline futures shot up around 3%. The immediate impact on the market was swift, with RBOB, the most closely watched wholesale gasoline price, rising by approximately 8 cents per gallon.
Experts predict that US gas prices will continue to rise, potentially reaching levels of $3.80-$3.90 per gallon in a relatively short period. According to Tom Kloza, global head of energy analysis for OPIS, "I think OPEC is reawakening the inflation monster." He attributed this sudden increase to the White House's shock and concern over the impact on the economy.
Currently, US gas prices stand at $3.51 per gallon, just below the $3.53 average price recorded on February 23, 2022 – a day before Russia invaded Ukraine and sent oil prices soaring. While the US plans additional releases from its Strategic Petroleum Reserve and has increased oil production and refining capacity, experts caution that this latest cut by OPEC+ will be challenging to offset.
The significant reduction in global oil supply is seen as a motivating factor for OPEC+, which could potentially lead to a sustained increase in gas prices. Kloza warned that US drivers might not see prices drop back down to $5 per gallon anytime soon, but noted the possibility of prices reaching year-earlier levels by summer, especially if any major storms affect production along the Gulf Coast.
The recent price surge marks a stark contrast to last year's record-breaking highs, which peaked at around $5.02 per gallon in June 2022.
The OPEC+ decision to slash oil production is quite fascinating, isn't it? 
It seems like they're trying to reassert their influence on the global energy market, and I suppose it's working to some extent. 
However, from a economic perspective, this move could be seen as counterintuitive, especially considering the potential impact on inflation. 
The idea that OPEC+ is "reawakening the inflation monster" resonates with me - it's almost as if they're intentionally trying to stimulate growth in certain sectors of the economy.
However, with OPEC+'s production cut, we can expect prices to rise again - albeit perhaps not as sharply as they did in 2022. 
I'm not surprised though, OPEC+ has been on the verge of cutting production for ages and now they've finally done it 
It's like a domino effect - as soon as one thing changes, everything else follows suit 
I mean, it was bound to happen eventually. The prices are gonna keep going up, there's no way around it 
$3.80-$3.90 per gallon is still pretty steep for most people, especially with the economy being what it is right now 
OPEC+ is like a big jerk with the gas prices 
. They cut production and watch as US drivers get slammed 
Prices gonna be high for a bit but I'm actually kinda optimistic about the long game. We're seeing a sign that we might finally get some sustainable prices after last year's crazy rollercoaster ride 
I'm kinda worried about gas prices right now... they're gonna get so expensive 
. The US economy is all connected, so if the global production cut hits, it's gonna be tough for ppl to afford fuel 
️. But on the other hand, we gotta think about the bigger picture – OPEC+ is trying to stabilize prices by cutting supply, which might actually help the environment 
and dont even get me started on the opis expert saying it's like "inflation monster" 
omg can someone please explain how this works so i can stop worrying about driving around in circles trying to find gas stations that have 3.50 a gallon 