OPEC+ Sees Surge in US Gas Prices as Oil Production Cut Kicks In
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have announced a surprise move to slash oil production by over 1.6 million barrels per day, starting from May, which is set to send shockwaves through the global energy market.
As a result, US gasoline futures have surged, with prices expected to be passed on to consumers in the form of higher gas prices at the pump. According to Tom Kloza, global head of energy analysis for OPIS, OPEC's decision has reawakened the "inflation monster" and will significantly impact US drivers.
The current national average gas price stands at $3.51 per gallon, with projections suggesting it could reach as high as $3.80 to $3.90 by summer, driven largely by the reduced oil production from OPEC+. Kloza believes that prices won't return to their pre-pandemic levels of around $5 per gallon but rather stabilize at higher prices.
The move is seen as a response to Russia's ongoing invasion of Ukraine, which disrupted global energy markets and led to a surge in gas prices. Last year, the average US regular gas price reached an unprecedented record high of $5.02 per gallon before gradually declining over several months.
However, Kloza notes that OPEC's decision is unlikely to be easily offset by additional releases from the US Strategic Petroleum Reserve or increased domestic oil production and refining capacity. Nevertheless, he acknowledges the group's ability to cut production and their apparent motivation to do so in response to global energy market dynamics.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have announced a surprise move to slash oil production by over 1.6 million barrels per day, starting from May, which is set to send shockwaves through the global energy market.
As a result, US gasoline futures have surged, with prices expected to be passed on to consumers in the form of higher gas prices at the pump. According to Tom Kloza, global head of energy analysis for OPIS, OPEC's decision has reawakened the "inflation monster" and will significantly impact US drivers.
The current national average gas price stands at $3.51 per gallon, with projections suggesting it could reach as high as $3.80 to $3.90 by summer, driven largely by the reduced oil production from OPEC+. Kloza believes that prices won't return to their pre-pandemic levels of around $5 per gallon but rather stabilize at higher prices.
The move is seen as a response to Russia's ongoing invasion of Ukraine, which disrupted global energy markets and led to a surge in gas prices. Last year, the average US regular gas price reached an unprecedented record high of $5.02 per gallon before gradually declining over several months.
However, Kloza notes that OPEC's decision is unlikely to be easily offset by additional releases from the US Strategic Petroleum Reserve or increased domestic oil production and refining capacity. Nevertheless, he acknowledges the group's ability to cut production and their apparent motivation to do so in response to global energy market dynamics.
]
. I mean, who needs a steady supply of oil when you can create a sense of urgency and make some cash? It's like they're playing the energy market like a game 
. I'm already seeing people talking about how this is gonna affect the economy and inflation... like, hello, didn't we have that problem last year? 
Still, at least it's interesting to watch from afar 
.
. Like, we all know oil production is a big deal, but it's wild how one move by OPEC can send prices skyrocketing in the US 
I'm just curious how this whole thing is gonna play out and whether we'll ever see those pre-pandemic gas prices again 
.
. I'm already dreading the summer road trips because of this 
.
! I'm all for saving energy and whatnot, but come on, who can afford that kind of price hike? 
. And yeah, Russia's invasion was a major factor here, so I get why they're stepping in 
.
gas prices are gonna sky rocket again 
$3.80+? no thanks 
how are ppl supposed to afford that?!
also, opis dude is right, inflation monster is real and prices won't come back down 