Oil producers from OPEC, along with their allies, have announced a surprise plan to slash oil production by more than 1.6 million barrels per day starting in May through the end of the year. This move will likely lead to higher gas prices at US pumps.
The reduction in oil output will be felt quickly due to the global nature of crude oil markets and the short supply chain for gasoline. As a result, RBOB, the most closely watched wholesale gasoline price, jumped by 8 cents per gallon or 3% in morning trading, according to Tom Kloza, global head of energy analysis at OPIS.
Kloza believes that OPEC's move will "reawaken the inflation monster" and is likely to shock the White House. He predicts that US gas prices could reach $3.80 to $3.90 per gallon in a short period, given current market conditions. However, he also notes that prices may not get as high as $5 per gallon or even $4 per gallon, at least in the near term.
Comparing this prediction to last year's average gas price of $4.19 per gallon and the record high of $5.02 per gallon set on June 14, 2022, Kloza suggests that prices may eventually rise above year-earlier levels if there is a hurricane or other storms affecting production along the Gulf Coast.
The US Strategic Petroleum Reserve's (SPR) release of oil has contributed to the decline in gas prices over the past few months. However, this action alone will not be enough to offset the impact of OPEC's reduction in oil output. The country's oil production and refining capacity have increased since last year, but a cut of 1 million barrels per day is still significant.
While the US plans additional releases from the SPR, Kloza believes that it won't be easy to make up for the reduced oil supply. Nevertheless, OPEC producers appear motivated to reduce their output, and this move will likely have a lasting impact on global energy markets.
The reduction in oil output will be felt quickly due to the global nature of crude oil markets and the short supply chain for gasoline. As a result, RBOB, the most closely watched wholesale gasoline price, jumped by 8 cents per gallon or 3% in morning trading, according to Tom Kloza, global head of energy analysis at OPIS.
Kloza believes that OPEC's move will "reawaken the inflation monster" and is likely to shock the White House. He predicts that US gas prices could reach $3.80 to $3.90 per gallon in a short period, given current market conditions. However, he also notes that prices may not get as high as $5 per gallon or even $4 per gallon, at least in the near term.
Comparing this prediction to last year's average gas price of $4.19 per gallon and the record high of $5.02 per gallon set on June 14, 2022, Kloza suggests that prices may eventually rise above year-earlier levels if there is a hurricane or other storms affecting production along the Gulf Coast.
The US Strategic Petroleum Reserve's (SPR) release of oil has contributed to the decline in gas prices over the past few months. However, this action alone will not be enough to offset the impact of OPEC's reduction in oil output. The country's oil production and refining capacity have increased since last year, but a cut of 1 million barrels per day is still significant.
While the US plans additional releases from the SPR, Kloza believes that it won't be easy to make up for the reduced oil supply. Nevertheless, OPEC producers appear motivated to reduce their output, and this move will likely have a lasting impact on global energy markets.
. I mean, $3.80-$3.90 per gallon is still pretty high, but we've seen prices like that before and they didn't exactly break the internet 
. And let's be real, a hurricane or two ain't gonna push gas prices above last year's average of $4.19 
. I'm thinkin' OPEC's just tryin' to make some extra cash, not necessarily cause a global panic 
. The SPR is already helpin' keep prices in check, and if the US keeps addin' more oil, things might calm down eventually 
oil prices are already crazy high and now OPEC is planning to cut production even more? that's just gonna push prices even higher 
$3.80 to $3.90 per gallon is insane, what if it goes up to $5 or even more?! 
we can't even afford the gas prices as it is, a cut of 1.6 million barrels per day is huge and i don't think our economy can handle it right now 
... but maybe they're just trying to squeeze more cash out of their oil before demand drops off in the coming months? 
... but yeah, a hurricane or other storms could definitely send prices back up if opec producers get caught off guard 
. It's not ideal for the US economy, but they gotta prioritize their own interests, you know? The global market can be crazy unpredictable 
. Maybe we'll get lucky and prices won't go as high as some folks are predicting 
