OPEC+ Takes Oil Production Cut, Sending US Gas Prices Soaring.
In a surprise move, OPEC+ announced on Sunday that it would slash oil production by over 1.6 million barrels per day starting in May and lasting through the end of the year. This news sent shockwaves through global energy markets, with Brent crude futures and WTI surging about 6% in trading Monday. The impact on US gas prices is expected to be even more pronounced.
According to energy analysts, the production cut will lead to higher oil prices, which will be passed down to consumers at US gas pumps. Gasoline futures are already seeing significant gains, with RBOB wholesale gasoline price surging about 3% or 8 cents per gallon in morning trading.
"I think OPEC is reawakening the inflation monster," said Tom Kloza, global head of energy analysis for OPIS. "The White House has to be shocked and major-time pissed. It certainly alters the calculus for a while." Kloza predicts that US gas prices could reach as high as $3.80 to $3.90 in relatively short order.
While there is still some optimism among analysts, with prices potentially returning to year-earlier levels by the end of summer if production disruptions are limited, many are warning against complacency. Kloza notes that the US plans additional releases from the Strategic Petroleum Reserve (SPR), which has helped keep prices in check, but an oil cut of this magnitude is not easily made up.
"Their ability to cut production and they seem motivated to do so," said Kloza. "We're not going to get back to $5 a gallon. I don't think we're even going as high as $4." However, the possibility of further disruptions to US oil production along the Gulf Coast could see prices rebounding.
It's worth noting that US gas prices are still relatively low compared to pre-war levels, with the national average standing at $3.51 on Monday. The last time prices reached this level was February 23, 2022, a day before Russia's invasion of Ukraine sent shockwaves through global energy markets.
In a surprise move, OPEC+ announced on Sunday that it would slash oil production by over 1.6 million barrels per day starting in May and lasting through the end of the year. This news sent shockwaves through global energy markets, with Brent crude futures and WTI surging about 6% in trading Monday. The impact on US gas prices is expected to be even more pronounced.
According to energy analysts, the production cut will lead to higher oil prices, which will be passed down to consumers at US gas pumps. Gasoline futures are already seeing significant gains, with RBOB wholesale gasoline price surging about 3% or 8 cents per gallon in morning trading.
"I think OPEC is reawakening the inflation monster," said Tom Kloza, global head of energy analysis for OPIS. "The White House has to be shocked and major-time pissed. It certainly alters the calculus for a while." Kloza predicts that US gas prices could reach as high as $3.80 to $3.90 in relatively short order.
While there is still some optimism among analysts, with prices potentially returning to year-earlier levels by the end of summer if production disruptions are limited, many are warning against complacency. Kloza notes that the US plans additional releases from the Strategic Petroleum Reserve (SPR), which has helped keep prices in check, but an oil cut of this magnitude is not easily made up.
"Their ability to cut production and they seem motivated to do so," said Kloza. "We're not going to get back to $5 a gallon. I don't think we're even going as high as $4." However, the possibility of further disruptions to US oil production along the Gulf Coast could see prices rebounding.
It's worth noting that US gas prices are still relatively low compared to pre-war levels, with the national average standing at $3.51 on Monday. The last time prices reached this level was February 23, 2022, a day before Russia's invasion of Ukraine sent shockwaves through global energy markets.
I'm surprised they cut production so early, I thought it'd be later in the year when we're closer to summer. Guess OPEC+ is trying to get ahead of things... gas prices are gonna hurt people who are already living paycheck to paycheck 
. And yeah, $3.80-$3.90 is a bit steep for me too... hope it's not as bad as everyone's saying 
I'm surprised that OPEC+ is going for such a drastic move. It's gonna be a tough road ahead for Americans and their gas wallets 
Interesting how the White House is already feeling the heat 
, OPEC+ decides to go all out on us again 
It's like they're trying to single-handedly ruin any progress we had on inflation. I'm pretty sure Tom Kloza isn't just having a bad day when he says "inflation monster". Anyway, back in 2022, US gas prices were at $3.51 and now they're over $3.50 
. Progress, right?
OPEC+ just decided to slash oil production by over 1.6 million barrels per day and now US gas prices are going to SOAR 
I mean, who needs $3.51 on the national average when we can go up to $3.80-$3.90? 
And don't even get me started on Tom Kloza saying we won't go as high as $4... that's just not true! 
We'll see, but I'm still hyperventilating about this one. Like, what if there are more disruptions to US oil production along the Gulf Coast? 
What if prices rebound because of it?! My anxiety is through the roof, man...
. But $3.80 to $3.90 per gallon?! That's crazy high 
. I'm more worried about what'll happen if there are disruptions along the Gulf Coast... that could totally flip prices around 
.
. I guess we'll just have to wait and see what happens next 
. opec is definitely playing with fire if they think we won't notice this price hike. i hope for everyone's sake that production gets back to normal soon 
. can't help but feel like this is all a huge weight on people's shoulders 
. They're cutting oil production now and that's gonna send shockwaves to our gas prices. I used to be a fan of cheap gas when I was driving around all day, but now that I'm retired I can appreciate the value of it even more 
.
.
... no wait, what I mean is they're probably making a huge mistake 
. Gas prices might just skyrocket and it'll be a total disaster 
. But on the bright side, gas prices are still kinda low compared to pre-war levels 
and Kloza's prediction of $5 a gallon is just wild 
anyway its good to know our reserves are ready just in case 
. It's like they're sticking it to the US and saying "sorry" for all those years of high gas prices 
. The oil cartel's got the US in their pocket 
.
I think OPEC is trying to balance supply and demand, but the timing is all wrong 
. The price surge might be good for oil-producing countries, but it's gonna hurt US consumers 
️. On the bright side, $3.51 is still relatively low compared to pre-war levels 
.