Oil Production Cut Sends Shockwaves Through US Gas Prices, Inflation Monster Reawakened.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies made a surprise move on Sunday, announcing that it would slash oil production by over 1.6 million barrels per day starting in May and running through the end of the year. The decision sent shockwaves through global energy markets, with Brent crude futures and US benchmark WTI jumping about 6% in trading on Monday.
The impact on US gas prices will be immediate and significant. Gasoline futures surged by around 8 cents a gallon, or 3%, as traders began to anticipate the consequences of the production cut on supply and demand. As one analyst noted, "I think OPEC is reawakening the inflation monster." The White House and consumers are likely to feel the pinch, with some predicting US gas prices could reach $3.80 to $3.90 per gallon in the near future.
While the national average for US gas prices was $3.51 on Monday, analysts like Tom Kloza, global head of energy analysis for OPIS, believe that prices can rise further if the production cut is not offset by sufficient increases in oil supply from other regions, such as the United States. Kloza pointed out that while the US has made efforts to increase its oil production and refining capacity, the impact of a 1 million barrel per day reduction in global supply will be difficult to mitigate.
However, some experts note that there are mitigating factors at play. The US plans to release additional oil from its Strategic Petroleum Reserve (SPR), which could help alleviate pressure on prices. Additionally, Kloza acknowledged that the US is not going back to record-high gas prices of $5 per gallon or even as high as $4.
Yet, another major supply disruption, such as a hurricane affecting production in the Gulf Coast region, could push prices back above year-earlier levels by summer. As one analyst noted, "We're not going to get back to $5 a gallon. I don’t think we’re even going as high as $4."
The Organization of the Petroleum Exporting Countries (OPEC) and its allies made a surprise move on Sunday, announcing that it would slash oil production by over 1.6 million barrels per day starting in May and running through the end of the year. The decision sent shockwaves through global energy markets, with Brent crude futures and US benchmark WTI jumping about 6% in trading on Monday.
The impact on US gas prices will be immediate and significant. Gasoline futures surged by around 8 cents a gallon, or 3%, as traders began to anticipate the consequences of the production cut on supply and demand. As one analyst noted, "I think OPEC is reawakening the inflation monster." The White House and consumers are likely to feel the pinch, with some predicting US gas prices could reach $3.80 to $3.90 per gallon in the near future.
While the national average for US gas prices was $3.51 on Monday, analysts like Tom Kloza, global head of energy analysis for OPIS, believe that prices can rise further if the production cut is not offset by sufficient increases in oil supply from other regions, such as the United States. Kloza pointed out that while the US has made efforts to increase its oil production and refining capacity, the impact of a 1 million barrel per day reduction in global supply will be difficult to mitigate.
However, some experts note that there are mitigating factors at play. The US plans to release additional oil from its Strategic Petroleum Reserve (SPR), which could help alleviate pressure on prices. Additionally, Kloza acknowledged that the US is not going back to record-high gas prices of $5 per gallon or even as high as $4.
Yet, another major supply disruption, such as a hurricane affecting production in the Gulf Coast region, could push prices back above year-earlier levels by summer. As one analyst noted, "We're not going to get back to $5 a gallon. I don’t think we’re even going as high as $4."
so basically it looks like opec is cutting oil production and that's gonna make gas prices go up? 
like, us gas prices are already kinda high now but this cut is just gonna make them jump again. i'm not a finance expert or anything but it seems to me that we're in for some pretty pricey road trips ahead...or at least that's what the experts are saying 
! One less million barrels of oil and gas prices are gonna sky rocket 
What's the point of having a strategic reserve if they're just gonna use it up to prop up the market? I mean, come on, $3.80 to $3.90 per gallon?! That's outrageous 
and let's be real, this OPEC move feels super reactionary – like they're trying to stifle growth and control the market rather than actually addressing supply chain issues 
. Prices are already climbing and it's gonna be a rough ride for most people's wallets 
. We're already seeing prices skyrocketing and if we don't see an increase in oil supply soon, it could get a lot worse 
I just hope the government can manage to keep things under control 
This news is like, woah! OPEC's oil production cut is gonna make US gas prices go through the roof 
. I'm not surprised though, global demand is still super strong and supply can't keep up. The inflation monster is real, folks 
️. I'm not sure if the US can offset the cut or what 
. But another big storm could flip prices back up 
! They should've cut production sooner, but now it's too late 
. I mean, $3.80 to $3.90 a gallon? That's highway robbery 
️! The US needs to get its act together and invest in renewable energy, stat 
. We can't keep relying on fossil fuels, it's time for a change 
like $3.80-$3.90 per gallon is already being predicted 
that's crazy! i'm not sure if releasing more oil from SPR will be enough to counteract the effect of the 1.6 million barrel reduction though 
what do you guys think? should we just buckle up and deal with it 
Plus, think about all the cars on the road, burning through fuel like there's no tomorrow. A little inflation never hurt anyone... 
like, what's next? another price hike to match the inflation monster? 
. The thing is, with the US already producing more oil than ever, I'm not sure how much of an impact this will actually have on prices 
. But still, $3.80-$3.90 per gallon? That's steep 
it's gonna be crazy for gas prices in the US i'm thinking $3.80-$3.90 per gallon is way too high that's like, what my uncle used to pay back in the day lol anyway the thing is the global supply is still pretty tight so if there aren't some other big oil-producing countries stepping up their game then we're stuck with higher prices 
Now we're back to the old days where prices can jump up in a heartbeat.
It's like, yeah, I get it, there's gonna be inflation. That's not exactly breaking news. Anyway, back to the oil production cut... 1.6 million barrels a day is still pretty massive, so let's see how this whole thing plays out. Will we actually hit those $3.80-$3.90 per gallon predictions? 
... it's like the inflation monster just came outta hibernation again 
... $3.80 to $3.90 per gallon? no thank you 
, I'm good with my current prices 