Oil producers in the Organization of the Petroleum Exporting Countries (OPEC) and its allies announced a surprise move to slash oil production by over 1.6 million barrels per day starting in May, marking a significant shift in the global energy landscape.
The news sent shockwaves through the markets, causing Brent crude futures to surge about 6% and US benchmark WTI prices to climb nearly as high. These price increases will be quickly passed on to consumers at gas pumps across the country, with RBOB – the most closely watched wholesale gasoline price – shooting up by around 8 cents a gallon.
Energy analyst Tom Kloza warns that this move could "reawaken the inflation monster" and has left the White House scrambling. According to Kloza, US drivers can expect to see gas prices rise significantly in the coming weeks, potentially reaching levels of $3.80 or higher, although he notes that prices may stabilize later in the summer if a hurricane or other storms disrupt oil production.
It's worth noting that while the current situation may seem dire for consumers, there are some mitigating factors at play. The US Strategic Petroleum Reserve is expected to release more oil into the market, and domestic oil production and refining capacity have increased significantly since 2022, which has helped keep prices relatively stable despite the Russia-Ukraine conflict.
However, OPEC's decision to cut production by such a significant amount will be difficult for the industry to recoup. Analysts are confident that producers have the ability to reduce output but may not be able or willing to make up for the lost production immediately.
The news sent shockwaves through the markets, causing Brent crude futures to surge about 6% and US benchmark WTI prices to climb nearly as high. These price increases will be quickly passed on to consumers at gas pumps across the country, with RBOB – the most closely watched wholesale gasoline price – shooting up by around 8 cents a gallon.
Energy analyst Tom Kloza warns that this move could "reawaken the inflation monster" and has left the White House scrambling. According to Kloza, US drivers can expect to see gas prices rise significantly in the coming weeks, potentially reaching levels of $3.80 or higher, although he notes that prices may stabilize later in the summer if a hurricane or other storms disrupt oil production.
It's worth noting that while the current situation may seem dire for consumers, there are some mitigating factors at play. The US Strategic Petroleum Reserve is expected to release more oil into the market, and domestic oil production and refining capacity have increased significantly since 2022, which has helped keep prices relatively stable despite the Russia-Ukraine conflict.
However, OPEC's decision to cut production by such a significant amount will be difficult for the industry to recoup. Analysts are confident that producers have the ability to reduce output but may not be able or willing to make up for the lost production immediately.
... like my grandma who's always complaining about how expensive gas is already 
... 1.6 million barrels per day is a huge deal! I'm still trying to wrap my head around it... and now we're gonna see those prices at the pump go up? 
$3.80 or higher? That's crazy talk 
... but on the bright side, at least the US Strategic Petroleum Reserve is stepping in to help out a bit 
... let's keep our fingers crossed that it makes a difference 
Not to mention it's gonna be a real challenge for them to make up for the lost production later on 
, can't believe they're gonna hit us like that 
. And honestly, I'm kinda curious about what's going to happen next? Will prices stabilize after summer? Can we expect a price war between refineries? There are so many questions and not enough answers 
. What do you guys think?! Should we be worried about inflation?! 
. On the bright side, the US SPR releasing more oil might be a good thing... but I'm not holding my breath. And what about those domestic refineries that have been churning out all that oil since 2022? Can't they just keep cranking it out to keep prices in check? 
, but at the same time, it's kinda scary thinking about the impact on our economy and inflation 
. On the other hand, I guess OPEC's decision does mean more cash for countries that need it most 
my kid is still getting used to paying full price for gas, now they're gonna be stuck with $3.80+ per gallon? 
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, and I'm not sure how much consumers will take this. $3.80+? That's like, wow. I remember when gas was under $2.50. This is like a total energy crisis all over again 
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just saw this news about opec cutting oil production 
and i'm like what now? is it a good thing or bad thing for us consumers? 
what about those people who can't afford high gas prices? 
. i mean, we're living in a time where prices are unpredictable and everything can change in an instant 
seems like they should've seen this coming? btw, I hope people are prepared for those $3.80+ gas prices... not sure my wallet can handle it 
but i guess opec's move is a total game changer for the oil industry... i mean who needs that kind of profit boost? 
still can't believe they're cutting production by 1.6 million barrels per day though! what's their thinking? 
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. And domestic production has increased since 2022, which has kept things relatively stable so far 
. Still, OPEC's move feels like a bit of a nuclear option 
The US Strategic Petroleum Reserve releasing more oil into the market will definitely help keep prices stable... unless there's a hurricane, then panic mode 
It makes sense in a weird way.