OPEC+ Has Unleashed a Price Hike for US Drivers, as the "Inflation Monster" Roars Back to Life
A surprise move by OPEC+ to slash oil production has sent shockwaves through the global energy market, with crude prices surging and gas futures soaring. The group's decision to cut oil output by more than 1.6 million barrels a day starting in May is set to have a direct impact on US drivers, who will soon be facing higher fuel prices.
The news sent Brent crude futures jumping about 6% in trading Monday, while WTI, the US benchmark, also rose significantly. Gasoline futures followed suit, with RBOB, the most closely watched wholesale gasoline price, up about 8 cents a gallon or around 3%. This sudden spike in gas prices will be felt by drivers quickly, as it is passed onto them through the fuel market.
According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, OPEC's move "is reawakening the inflation monster." The White House has been caught off guard, and this development alters the calculus for the time being. Kloza believes that US gas prices will rise to $3.80 or higher in relatively short order.
While some might have hoped to see US gas prices return to their pre-pandemic levels of around $2.50 per gallon, Kloza is more cautious. He estimates that prices won't reach the record-highs of 2022, where they peaked at over $5.02 per gallon on June 14. However, he notes that prices could rebound if there are disruptions to production along the Gulf Coast or in the event of a hurricane.
It's worth noting that US gas prices were already close to their pre-pandemic levels before Russia's invasion of Ukraine disrupted global energy markets and led to a surge in prices. Even last year, when oil prices were at their lowest point since 2020, US regular gasoline averaged around $4.19 per gallon. The recent decline was partly driven by the release of oil from the Strategic Petroleum Reserve and concerns about a potential recession.
Kloza acknowledges that one factor keeping prices low is the US's plans to release more oil from its reserve. Additionally, US oil production and refining capacity have both increased since 2022. However, he notes that OPEC+ has shown they are capable of making cuts and seems motivated to do so.
A surprise move by OPEC+ to slash oil production has sent shockwaves through the global energy market, with crude prices surging and gas futures soaring. The group's decision to cut oil output by more than 1.6 million barrels a day starting in May is set to have a direct impact on US drivers, who will soon be facing higher fuel prices.
The news sent Brent crude futures jumping about 6% in trading Monday, while WTI, the US benchmark, also rose significantly. Gasoline futures followed suit, with RBOB, the most closely watched wholesale gasoline price, up about 8 cents a gallon or around 3%. This sudden spike in gas prices will be felt by drivers quickly, as it is passed onto them through the fuel market.
According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, OPEC's move "is reawakening the inflation monster." The White House has been caught off guard, and this development alters the calculus for the time being. Kloza believes that US gas prices will rise to $3.80 or higher in relatively short order.
While some might have hoped to see US gas prices return to their pre-pandemic levels of around $2.50 per gallon, Kloza is more cautious. He estimates that prices won't reach the record-highs of 2022, where they peaked at over $5.02 per gallon on June 14. However, he notes that prices could rebound if there are disruptions to production along the Gulf Coast or in the event of a hurricane.
It's worth noting that US gas prices were already close to their pre-pandemic levels before Russia's invasion of Ukraine disrupted global energy markets and led to a surge in prices. Even last year, when oil prices were at their lowest point since 2020, US regular gasoline averaged around $4.19 per gallon. The recent decline was partly driven by the release of oil from the Strategic Petroleum Reserve and concerns about a potential recession.
Kloza acknowledges that one factor keeping prices low is the US's plans to release more oil from its reserve. Additionally, US oil production and refining capacity have both increased since 2022. However, he notes that OPEC+ has shown they are capable of making cuts and seems motivated to do so.
. I'm not surprised to see prices rising now, it's just part of the natural cycle of things. The thing is, we can't predict with certainty how much these price hikes will affect people. Some folks might be okay with it, especially if they're used to paying more for fuel. But for those who are on a tight budget, it could make life a bit tougher.
. They always try to keep prices low so people can breathe easy. Guess we'll just have to wait and see how they respond to OPEC+'s move. One thing's for sure, it's gonna be interesting to watch the markets and how things play out over the next few weeks 
... OPEC+ slashing oil production again? Like, isn't the point of having these global energy bodies is to stabilize prices for everyone? Not just make life harder for US drivers 
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who gotta deal with these rising gas prices lol 3 bucks a gallon is crazy talk 
anyway, gotta give props to tom Kloza for being super honest about the inflation monster roarin' back to life 
3 bucks might seem steep but hey at least the us is releasin' more oil from its reserve that's a good move 
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Oh no, this is not good news for anyone... especially those who are already struggling financially 
I can imagine how frustrating it must be to see gas prices rising again after being relatively affordable for a while 
I was really hoping to see prices drop back down after everything last year but it looks like the OPEC+ thing just sent them sky-highing again 
that $3.80 price point is just terrifying - what's going to happen if they actually hit $4? my car payment is already so high and gas is basically the only other bill i can't control... 
doesn't that sound crazy expensive for just driving around? i know gas is expensive wherever you go but in us it feels way outta whack to me. i mean, have you seen the prices of coffee lately? 
like what do you pay for that?!
It's got this crazy spicy kick that I'm totally obsessed with! Anyway, back to the oil prices... yeah, it's no surprise they're gonna go up. You know what's not surprising though? How fast Netflix is going to start raising its prices 
. Like, I get it, content costs money, but can't we just get more ad-free options instead? 
. I remember when gas was like $2.50 back in the day... what's wrong with a little inflation, right? But I guess it's not just about us, OPEC+ is doing their thing and it's affecting everyone. 6% jump in Brent crude futures? That's crazy! 
maybe if there aren't any disruptions, we'll see prices go even lower 
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i mean think about it, if opec+ really did cut oil production just for the sake of it, why would they do that now? what's changing in their minds or motivations? 
at all, but still it's gonna hurt US drivers' wallets big time 
$3.80 a gallon is just ridiculous