OPEC+ decision sends shockwaves through the US energy market, threatening to push gas prices even higher. The cartel's surprise move to slash oil production by over 1.6 million barrels a day starting in May is set to have a significant impact on global oil benchmarks, with Brent crude futures and WTI jumping up about 6% in trading Monday.
As a result, gasoline futures are also soaring, with RBOB, the most closely watched wholesale gasoline price, increasing by around 8 cents a gallon or 3%. This will likely be passed onto US drivers quickly, further fueling concerns that gas prices are on the rise. Tom Kloza, global head of energy analysis for OPIS, believes OPEC's move is "rewakening the inflation monster," and the White House should be "shocked and major-time pissed" by this development.
The current national average for US gas prices stands at $3.51 a gallon, according to AAA, and Kloza predicts that prices could reach as high as $3.80 to $3.90 in relatively short order. However, he remains optimistic that prices won't get anywhere near the record levels of 2022, citing the US's plans for additional oil releases from the Strategic Petroleum Reserve, as well as increased domestic production and refining capacity.
One factor keeping prices in check is the ability of OPEC+ to cut production, with Kloza noting that "they have the ability to cut production and they seem motivated to do so." However, this will not be an easy task to make up for. The US average gas price was just below $3.53 on February 23, 2022 – the day before Russia's invasion of Ukraine – and Kloza believes that by the end of the summer, US drivers could see prices return to year-earlier levels, particularly if there are disruptions to production along the Gulf Coast due to hurricanes or other storms.
The recent price spike was largely driven by the disruption caused by Russia's invasion of Ukraine, which led to a significant decrease in global oil supply. However, Kloza notes that this is not an ideal scenario for the US energy market.
As a result, gasoline futures are also soaring, with RBOB, the most closely watched wholesale gasoline price, increasing by around 8 cents a gallon or 3%. This will likely be passed onto US drivers quickly, further fueling concerns that gas prices are on the rise. Tom Kloza, global head of energy analysis for OPIS, believes OPEC's move is "rewakening the inflation monster," and the White House should be "shocked and major-time pissed" by this development.
The current national average for US gas prices stands at $3.51 a gallon, according to AAA, and Kloza predicts that prices could reach as high as $3.80 to $3.90 in relatively short order. However, he remains optimistic that prices won't get anywhere near the record levels of 2022, citing the US's plans for additional oil releases from the Strategic Petroleum Reserve, as well as increased domestic production and refining capacity.
One factor keeping prices in check is the ability of OPEC+ to cut production, with Kloza noting that "they have the ability to cut production and they seem motivated to do so." However, this will not be an easy task to make up for. The US average gas price was just below $3.53 on February 23, 2022 – the day before Russia's invasion of Ukraine – and Kloza believes that by the end of the summer, US drivers could see prices return to year-earlier levels, particularly if there are disruptions to production along the Gulf Coast due to hurricanes or other storms.
The recent price spike was largely driven by the disruption caused by Russia's invasion of Ukraine, which led to a significant decrease in global oil supply. However, Kloza notes that this is not an ideal scenario for the US energy market.
I'm kinda worried about these new OPEC+ plans... cutting production like 1.6 million barrels a day? 
that's a lot. Gas prices are already kinda high, and if they keep going up it's gonna suck. People might start thinking twice before filling up their tanks 
. But at the same time, I guess it's good that OPEC+ is motivated to cut production... that's gotta be a relief for some folks 
. On the other hand, I don't think it's all sunshine and rainbows - what about when hurricanes hit the Gulf Coast? We'll have another price spike on our hands 
. Maybe prices will go back down by summer, but I'm not counting on it 
.
they're like, "hey, let's cut production and watch our friends in the us get slapped w/ higher gas prices" 
it's all about control, folks. and Kloza is basically saying it's like a "rewakening of the inflation monster" lol what's next? them gonna raise interest rates 2??? 
. And hey, we'll just have to deal with it... or find a way to make our cars more fuel-efficient 
OPEC+ just dropped some serious news and it's gonna hit the US hard... gas prices are about to get a whole lot worse! 
The White House needs to get ready for some major backlash from US drivers. $3.80 - $3.90 per gallon? 
. The US is still reeling from Russia's invasion, and now this? It's like one bad thing after another 
. The US needs a long-term plan to reduce our reliance on foreign oil and increase domestic production. Otherwise, we're stuck in this price cycle forever 
.
Like, who needs $3.50 a gallon when you can get it for $3.80? 
On a more serious note, though, this OPEC+ move is gonna make life tough for US drivers. But honestly, I think Kloza's right that we won't see prices go all the way back to 2022 levels anytime soon. The US has been working on increasing oil production and refining capacity, so that's a positive sign.
. I mean, who saw that coming? But it's not ideal for our energy market, that's for sure. Still, at least we have some wiggle room with those additional oil releases from the Strategic Petroleum Reserve.
! OPEC+ slashin' production by 1.6 million barrels a day? That's huge, fam! 
That's just crazy talk! I'm all for the White House tryin' to cut prices down with that Strategic Petroleum Reserve release, but this is like tryin' to put out a fire with gasoline 
.
️. OPEC+ has the power to cut production, and they're doin' it just in time for summer 
. I'm not too optimistic about this situation, bro 
. The US energy market is already stressed out from Russia's invasion of Ukraine, and now we got this? It's like a double whammy 
.
. And let's not forget, the Strategic Petroleum Reserve has got our backs, with 500 million barrels of oil set to be released by the end of 2025 
.
. That's a significant slowdown, and I think it will help keep prices in check.
. If we hit those predicted prices of $3.80 to $3.90 by summer, it's gonna be a tough pill for drivers to swallow 
With RBOB (wholesale gasoline) jumping by 8 cents a gallon, it's only a matter of time before US drivers feel the pinch.
If the US can keep producing and refining at home, we might just see some relief from these price spikes.
. Like, why would you do that? And then we're just gonna pass those costs onto regular people at the pump 
. But Kloza is right, OPEC+ has some power here and if they use it wisely, maybe we can avoid a total energy crisis 
. I remember when Russia invaded Ukraine and it caused a huge spike in prices, and now this? It's just crazy. The thought of $3.80-$3.90 a gallon is insane 
.
We don't want inflation getting the best of us