US Gas Prices Set for Sharp Spike as OPEC Cuts Oil Output, Analysts Warn.
In a surprise move that sent shockwaves through the global energy market, OPEC+ announced Monday it would slash oil production by over 1.6 million barrels per day starting in May, effective until the end of the year. The reduction will have an immediate impact on gasoline futures, with prices expected to surge as soon as Wednesday.
Analysts predict that US gas prices could spike by upwards of $3.80 a gallon within the next few days, bringing them closer to record levels set last summer. Tom Kloza, global head of energy analysis at OPIS, attributes the move to OPEC+ to a "reawakening of the inflation monster," stating that it will "alter the calculus for a while."
Kloza also warns that US drivers are unlikely to see prices drop back down to pre-pandemic levels. While some analysts have suggested that gas prices could return to around $4 per gallon by year-end, Kloza believes they will only reach $3.80 or $3.90.
It's worth noting that the price surge was already underway on Monday morning, with RBOB – the most closely watched wholesale gasoline price – jumping up 8 cents a gallon, or about 3%, in morning trading.
One factor keeping prices from getting as high as they did last summer is the additional release of oil from the US Strategic Petroleum Reserve, which helped to stabilize prices. Additionally, US oil production and refining capacity have both increased since then, making it more challenging for OPEC+ to impact prices.
However, Kloza believes that OPEC+'s ability to cut production, combined with their motivation to do so, makes this reduction a serious move that will be difficult to offset.
In a surprise move that sent shockwaves through the global energy market, OPEC+ announced Monday it would slash oil production by over 1.6 million barrels per day starting in May, effective until the end of the year. The reduction will have an immediate impact on gasoline futures, with prices expected to surge as soon as Wednesday.
Analysts predict that US gas prices could spike by upwards of $3.80 a gallon within the next few days, bringing them closer to record levels set last summer. Tom Kloza, global head of energy analysis at OPIS, attributes the move to OPEC+ to a "reawakening of the inflation monster," stating that it will "alter the calculus for a while."
Kloza also warns that US drivers are unlikely to see prices drop back down to pre-pandemic levels. While some analysts have suggested that gas prices could return to around $4 per gallon by year-end, Kloza believes they will only reach $3.80 or $3.90.
It's worth noting that the price surge was already underway on Monday morning, with RBOB – the most closely watched wholesale gasoline price – jumping up 8 cents a gallon, or about 3%, in morning trading.
One factor keeping prices from getting as high as they did last summer is the additional release of oil from the US Strategic Petroleum Reserve, which helped to stabilize prices. Additionally, US oil production and refining capacity have both increased since then, making it more challenging for OPEC+ to impact prices.
However, Kloza believes that OPEC+'s ability to cut production, combined with their motivation to do so, makes this reduction a serious move that will be difficult to offset.
like, I'm trying to save up for my summer road trip and now it's gonna cost me even more? 
i remember when gas was like $2.50 a gallon... those were the days 
anyway, i guess opec+ is just trying to control the market and all that jazz 
but honestly, can't we just have stable prices for once?! 
so now us drivers r gonna see prices jump up to $3.80 a gallon... its like we r back in summer last yr, u feel? 
what do u think??
. It's already happening, too - RBOB jumped 8 cents in morning trading. That's 3% folks! 
. The inflation monster is real, and it's getting fierce 
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This is not good news at all... I mean, who needs $3.80 a gallon for gas anyway? 
Like we're not already living on the edge as it is with inflation and everything else going up. And now OPEC's cutting oil production? That's like pouring gasoline on the fire 
. I'm sure it'll just make things worse for US drivers. The pandemic was bad enough, but at least gas prices were decent back then 
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$3.80 a gallon?! that's crazy!!! i'm trying to save money by making my own soap and cleaning products, but now i'll have to rethink my budget for my car 
still hoping the price won't be too bad this summer tho, don't wanna break the bank 
it feels like they're playing with fire here. what's next? are we gonna see a spike in food prices too 
maybe we should all start carpooling or something lol just kidding (kinda)