OPEC+ Puts US Drivers on Notice: Gas Prices Poised for Spike
A surprise move by the Organization of the Petroleum Exporting Countries (OPEC) has sent shockwaves through the energy market, setting the stage for a potential spike in US gas prices. The cartel announced a reduction in oil production of over 1.6 million barrels per day, effective May, which will have far-reaching consequences on gasoline futures and pump prices.
The news sent global oil benchmarks Brent crude and WTI surging by around 6% in Monday's trading, with US gasoline futures not far behind, rising about 8 cents a gallon or 3%. Industry analysts predict that these price increases will be felt at the pumps sooner rather than later, as OPEC's move has already begun to influence wholesale gas prices.
Tom Kloza, global head of energy analysis for OPIS, a leading provider of fuel price data, believes that OPEC's decision is likely to reignite inflationary pressures on US gas prices. "I think OPEC is reawakening the inflation monster," he said. "The White House has to be shocked and major-time pissed. It certainly alters the calculus for a while." Kloza forecasts that average US regular gas prices could reach $3.80 to $3.90 in relatively short order.
While there are indications that US oil production capacity is higher, Kloza noted that OPEC's reduction of 1.6 million barrels per day will not be easy to compensate for. However, the analyst did acknowledge that the US Strategic Petroleum Reserve has provided some relief by releasing oil on the market, and that an increase in refining capacity should help alleviate pressures.
With gas prices already hovering just below their 2022 peak of $3.53, a sustained increase could take them back up to levels not seen since the record-breaking price of $5.02 per gallon on June 14, 2022. However, Kloza remains optimistic that prices will stabilize by year-end, particularly if there is no major disruption in production along the Gulf Coast.
One key factor keeping prices from surging back into record territory is the ongoing influence of global economic concerns and fears of a recession. While OPEC's move may send gas prices up, it is unclear whether this will be enough to overcome the current downturn in demand for gasoline.
A surprise move by the Organization of the Petroleum Exporting Countries (OPEC) has sent shockwaves through the energy market, setting the stage for a potential spike in US gas prices. The cartel announced a reduction in oil production of over 1.6 million barrels per day, effective May, which will have far-reaching consequences on gasoline futures and pump prices.
The news sent global oil benchmarks Brent crude and WTI surging by around 6% in Monday's trading, with US gasoline futures not far behind, rising about 8 cents a gallon or 3%. Industry analysts predict that these price increases will be felt at the pumps sooner rather than later, as OPEC's move has already begun to influence wholesale gas prices.
Tom Kloza, global head of energy analysis for OPIS, a leading provider of fuel price data, believes that OPEC's decision is likely to reignite inflationary pressures on US gas prices. "I think OPEC is reawakening the inflation monster," he said. "The White House has to be shocked and major-time pissed. It certainly alters the calculus for a while." Kloza forecasts that average US regular gas prices could reach $3.80 to $3.90 in relatively short order.
While there are indications that US oil production capacity is higher, Kloza noted that OPEC's reduction of 1.6 million barrels per day will not be easy to compensate for. However, the analyst did acknowledge that the US Strategic Petroleum Reserve has provided some relief by releasing oil on the market, and that an increase in refining capacity should help alleviate pressures.
With gas prices already hovering just below their 2022 peak of $3.53, a sustained increase could take them back up to levels not seen since the record-breaking price of $5.02 per gallon on June 14, 2022. However, Kloza remains optimistic that prices will stabilize by year-end, particularly if there is no major disruption in production along the Gulf Coast.
One key factor keeping prices from surging back into record territory is the ongoing influence of global economic concerns and fears of a recession. While OPEC's move may send gas prices up, it is unclear whether this will be enough to overcome the current downturn in demand for gasoline.
. First, they reduce oil production and then watch as US drivers get slammed with higher gas prices 
. I mean, come on, can't they see that this is just gonna fuel inflationary pressures? It's like they're playing a game of economic chicken 
.
. We need to see some real leadership on this one, not just more empty rhetoric 
.
might take some time for those numbers to actually play out 
. A 6% surge in oil prices already? That's not even close to what I'd expect at this point in the year. And if they're talking about $3.80-$3.90 per gallon, that's crazy talk 
. OPEC's move is definitely not good news 
, and I'm not sure even the White House is ready for it 
.
we need more oil production not less 
and what's with all these price spikes in the first place? 
hopefully theyre prepared for it or the gov will have to step in again 
This news better not make my wallet cry 
. 1.6 million barrels per day reduction? That's some serious supply chain disruption right there 
. I mean, I know OPEC is trying to prop up their economies and whatnot, but can't they just chill for a sec 
? The US already has enough problems with inflation, don't need gas prices joining the party 
. And Tom Kloza's "inflation monster" comment? 
.
. $3.80 to $3.90 per gallon? That's crazy talk! 