OPEC+ Takes Bold Step, US Gas Prices Expected to Soar as Production Cuts Kick In
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have announced a surprise move to slash oil production by over 1.6 million barrels per day, effective May. This bold step is set to send shockwaves through the global energy market and fuel higher US gas prices.
As a result, both Brent crude futures and WTI, the US benchmark, saw significant gains of around 6% in Monday's trading session, with gasoline futures also experiencing a notable increase. The impact on US drivers will be immediate, with wholesale gasoline prices rising by approximately 8 cents per gallon, or about 3%, in morning trading.
According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, OPEC's move is "rewaking the inflation monster." The White House is likely to be taken aback by this development, as it will alter the calculus and impact consumer spending.
Currently, US gas prices stand at $3.51 per gallon, according to AAA. Kloza predicts that prices could rise to around $3.80 to $3.90 in relatively short order due to the production cuts. However, he also notes that prices may stabilize or even decrease by the end of summer if there is a hurricane or other storms affecting production along the Gulf Coast.
The national average for US gas prices was just below $3.53 on February 23, 2022 – the day before Russia's invasion of Ukraine. Kloza believes that one factor keeping prices in check is the planned additional releases from the US Strategic Petroleum Reserve and the increase in US oil production and refining capacity.
However, OPEC's ability to cut production and their motivation for doing so may ultimately prove challenging to offset. As Kloza puts it, "They have the ability to cut production and they seem motivated to do so."
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have announced a surprise move to slash oil production by over 1.6 million barrels per day, effective May. This bold step is set to send shockwaves through the global energy market and fuel higher US gas prices.
As a result, both Brent crude futures and WTI, the US benchmark, saw significant gains of around 6% in Monday's trading session, with gasoline futures also experiencing a notable increase. The impact on US drivers will be immediate, with wholesale gasoline prices rising by approximately 8 cents per gallon, or about 3%, in morning trading.
According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, OPEC's move is "rewaking the inflation monster." The White House is likely to be taken aback by this development, as it will alter the calculus and impact consumer spending.
Currently, US gas prices stand at $3.51 per gallon, according to AAA. Kloza predicts that prices could rise to around $3.80 to $3.90 in relatively short order due to the production cuts. However, he also notes that prices may stabilize or even decrease by the end of summer if there is a hurricane or other storms affecting production along the Gulf Coast.
The national average for US gas prices was just below $3.53 on February 23, 2022 – the day before Russia's invasion of Ukraine. Kloza believes that one factor keeping prices in check is the planned additional releases from the US Strategic Petroleum Reserve and the increase in US oil production and refining capacity.
However, OPEC's ability to cut production and their motivation for doing so may ultimately prove challenging to offset. As Kloza puts it, "They have the ability to cut production and they seem motivated to do so."
OPEC's decision is gonna have major ripples in the energy market! $3.80 to $3.90 for a gallon of gas? that's like, crazy expensive 
I get why they're doing it, but I'm not sure if it's really gonna make a difference... what with all the new oil refineries popping up and the US strategic reserve having some extra juice 
I mean, aren't we just delaying the inevitable? 
. The US economy was already pretty fragile, and with inflation on the rise, it's like putting extra weight on an already creaky system 
.
. It's crazy to think about all these countries relying on oil exports 
. The White House will need to step in and adjust their strategies, but it's not gonna be easy 
.
my wallet is already screaming at me for the increase
but till then, i'm just gonna have to shell out more cash 
️. OPEC's got some serious clout here, and if they can keep up this production cut plan, it could get real 
. I'm not saying it's a bad thing or anything, but some people might be feelin' the pinch hard 
. OPEC's production cuts are definitely going to make an impact on US drivers... $3.80-$3.90 per gallon is no joke! 
.
what do you think is going on behind the scenes with opec? are they trying to control the market or is it just a matter of global demand?! let me know in the comments below!!! 
! 
. We can reduce our carbon footprint and still afford to live comfortably 
. Governments should incentivize eco-friendly cars and charging stations 
️.
Still, I guess this is just another reminder of how interconnected our world has become 
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They gotta be kiddin' us right? 
. I guess it's good to know that prices might go down by summer if there are storms affecting production, but let's be real, that's not a guarantee 
cuz the planet needs some help reducing pollution, right? 
but uhhhh, can't we just have cheap gas forever?! 
$3.80-$3.90 per gallon? That's crazy talk! And yeah the White House is probably not thrilled about it. Tom Kloza makes some good points about how this could impact inflation and consumer spending, but I'm also thinking maybe those summer storms will save the day 
. But until then, I'm just over here feeling like I'm stuck in some kind of never-ending gas-guzzling nightmare 
. And what's with the White House not being prepared for this? Shouldn't they have been negotiating with OPEC all along? This is like, "We didn't see it coming" moment, you know?