Oil Production Cut Sparks Fears of Higher Gas Prices: OPEC's Surprise Move Could Drive US Gasoline Costs Up.
The Organization of the Petroleum Exporting Countries (OPEC) has announced a surprise reduction in oil production, sparking concerns that this move could lead to higher gas prices at the pump. As of May, OPEC+ will cut its daily oil output by over 1.6 million barrels, which is expected to impact global oil markets and subsequently drive up gasoline futures.
The news sent oil prices soaring, with Brent crude futures increasing around 6% in trading on Monday, while WTI crude futures rose about 5%. This price surge has already been felt at the wholesale level, with RBOB gasoline futures rising by nearly 3% to an 8-cent-per-gallon increase or a 3% rise. These gains will likely be passed onto US drivers, contributing to higher gas prices in the coming days.
According to Tom Kloza, global head of energy analysis for OPIS, OPEC's move "is reawakening the inflation monster." The White House has expressed concern over this development, and it may alter the calculus for policymakers. Kloza predicts that gas prices could rise to around $3.80 to $3.90 per gallon in relatively short order.
While some analysts believe that US drivers will not see prices as high as $5 a gallon, Kloza notes that year-earlier prices were already at $4.19 per gallon before Russia's invasion of Ukraine. However, the average gas price has been trending downward since then, driven by releases from the US Strategic Petroleum Reserve and reduced demand due to recession concerns.
Even with the recent decline in gas prices, the current national average of $3.51 remains just below the pre-invasion record of $3.53 on February 23, 2022. Kloza believes that OPEC's move will not be easily offset by US oil production and refining capacity increases, which is expected to contribute to higher costs at the pump.
However, it's worth noting that US producers have already made efforts to increase production and supply, and there are plans for additional releases from the SPR in the coming months. Nevertheless, OPEC's surprise move has injected uncertainty into the market, and it remains to be seen how this will impact gas prices in the short term.
The Organization of the Petroleum Exporting Countries (OPEC) has announced a surprise reduction in oil production, sparking concerns that this move could lead to higher gas prices at the pump. As of May, OPEC+ will cut its daily oil output by over 1.6 million barrels, which is expected to impact global oil markets and subsequently drive up gasoline futures.
The news sent oil prices soaring, with Brent crude futures increasing around 6% in trading on Monday, while WTI crude futures rose about 5%. This price surge has already been felt at the wholesale level, with RBOB gasoline futures rising by nearly 3% to an 8-cent-per-gallon increase or a 3% rise. These gains will likely be passed onto US drivers, contributing to higher gas prices in the coming days.
According to Tom Kloza, global head of energy analysis for OPIS, OPEC's move "is reawakening the inflation monster." The White House has expressed concern over this development, and it may alter the calculus for policymakers. Kloza predicts that gas prices could rise to around $3.80 to $3.90 per gallon in relatively short order.
While some analysts believe that US drivers will not see prices as high as $5 a gallon, Kloza notes that year-earlier prices were already at $4.19 per gallon before Russia's invasion of Ukraine. However, the average gas price has been trending downward since then, driven by releases from the US Strategic Petroleum Reserve and reduced demand due to recession concerns.
Even with the recent decline in gas prices, the current national average of $3.51 remains just below the pre-invasion record of $3.53 on February 23, 2022. Kloza believes that OPEC's move will not be easily offset by US oil production and refining capacity increases, which is expected to contribute to higher costs at the pump.
However, it's worth noting that US producers have already made efforts to increase production and supply, and there are plans for additional releases from the SPR in the coming months. Nevertheless, OPEC's surprise move has injected uncertainty into the market, and it remains to be seen how this will impact gas prices in the short term.
and now gas prices might skyrocket 
. i dont mind paying a bit more for my daily commute, but its gonna affect people who cant afford it . plus, we all know the us can produce our own oil, so this feels like a big deal 
. hope opecs move doesnt cause too much chaos on the market 
a 6% rise in brent crude futures already had them sweating, now this opec cut is gonna push prices even higher... $3.80-$3.90 per gallon ain't exactly out of reach for some people but still, that's still pretty steep 
think about it they're tryna reduce production so we dont get too much oil flooding the market that'd drive prices DOWN not up like Kloza said they shouldnt be worried tho US drivers still got it in for them like $5 a gallon is crazy talk 
oil production cut is gonna drive up gas prices and i dont think its a good time for that 
thats crazy thinking of all those ppl who are still struggling to make ends meet 
I'm telling you, this is not a good thing for US drivers! They're gonna get hammered by these higher gas prices 
. still, idk if $3.80 to $3.90 a gallon is too high for some people... some people arent gonna be able to handle that kinda price increase 
. what do u guys think? 
. The thought of paying $3.80-$3.90 per gallon is crazy 
.
if opec really goes through with that oil production cut. i get that they're trying to stabilize prices or whatever, but us drivers are gonna feel the pinch for sure. $3.80 a gallon is already looking like a nightmare scenario 
And hey, maybe we'll see some of that extra cash invested in renewable energy projects? That'd be awesome for the planet, right? 
We just gotta keep an eye on things and plan accordingly. If you're a driver, consider carpooling or using public transport - it's good for the environment too! 
And if you have some extra cash, now might be the time to invest in something that'll grow over time... like a diversified portfolio? Just saying... 
. and now they're gonna pass those costs on to us 
.
. This latest OPEC move is like, woah, 1.6 million barrels cut? That's like, a big deal. I'm already feeling the pinch with $3.51 avg gas price and this news just made it worse 
. Kloza's inflation monster prophecy better come true or else people will be grumbling about prices at the pump for real 
.
️. And now they're predicting prices could hit $3.80-$3.90 a gallon 
. The White House is all like "concerned" but I'm sure it'll just be business as usual for them 
.
. I mean, $3.80-$3.90 per gallon? That's just ridiculous for me! 
and gym memberships 
. Do we really need the added stress of watching our gas prices skyrocket?! 
I guess only time will tell if US producers can keep up with OPEC's move or if we're stuck with higher costs... Fingers crossed for some innovative solutions, though! 
#GasPriceWar #FuelForThought #SustainabilityMatters