Oil Production Cut Sparks Concern Over Rising US Gas Prices
OPEC+ has made a surprise move to slash oil production by over 1.6 million barrels per day, starting in May and running through the end of the year. This decision is expected to have an immediate impact on global oil prices and ultimately, gas prices at US pumps.
The news sent Brent crude futures and WTI, the US benchmark, surging up about 6% in trading Monday. Gasoline futures also rose, with RBOB, the most closely watched wholesale gasoline price, increasing by about 8 cents a gallon or 3%, in morning trading.
Analysts warn that OPEC's move could reignite inflation concerns and send US gas prices higher. "I think OPEC is reawakening the inflation monster," said Tom Kloza, global head of energy analysis for OPIS. "The White House has to be shocked and major-time pissed." Kloza predicts that US gas prices could rise to $3.80-$3.90 per gallon in relatively short order.
While US average gas prices are currently at $3.51, which is below the pre-pandemic level of $2.75 on February 23, 2020, analysts caution that this move will be difficult to offset. The US Strategic Petroleum Reserve's additional releases and increased oil production capacity have kept prices in check. However, OPEC's significant cut could alter the market dynamics.
The national average for US gas prices stood at $3.51 on Monday, according to AAA. Kloza stated that, while a price surge of $4 per gallon is unlikely, prices might reach year-earlier levels by the end of summer if there are any disruptions in production along the Gulf Coast or a hurricane hits.
In contrast to 2022 when gas prices hit record highs due to Russia's invasion of Ukraine and global market volatility, Kloza suggests that the US oil refining capacity has improved, limiting price increases. Nevertheless, this latest OPEC move underscores the delicate nature of the energy market.
OPEC+ has made a surprise move to slash oil production by over 1.6 million barrels per day, starting in May and running through the end of the year. This decision is expected to have an immediate impact on global oil prices and ultimately, gas prices at US pumps.
The news sent Brent crude futures and WTI, the US benchmark, surging up about 6% in trading Monday. Gasoline futures also rose, with RBOB, the most closely watched wholesale gasoline price, increasing by about 8 cents a gallon or 3%, in morning trading.
Analysts warn that OPEC's move could reignite inflation concerns and send US gas prices higher. "I think OPEC is reawakening the inflation monster," said Tom Kloza, global head of energy analysis for OPIS. "The White House has to be shocked and major-time pissed." Kloza predicts that US gas prices could rise to $3.80-$3.90 per gallon in relatively short order.
While US average gas prices are currently at $3.51, which is below the pre-pandemic level of $2.75 on February 23, 2020, analysts caution that this move will be difficult to offset. The US Strategic Petroleum Reserve's additional releases and increased oil production capacity have kept prices in check. However, OPEC's significant cut could alter the market dynamics.
The national average for US gas prices stood at $3.51 on Monday, according to AAA. Kloza stated that, while a price surge of $4 per gallon is unlikely, prices might reach year-earlier levels by the end of summer if there are any disruptions in production along the Gulf Coast or a hurricane hits.
In contrast to 2022 when gas prices hit record highs due to Russia's invasion of Ukraine and global market volatility, Kloza suggests that the US oil refining capacity has improved, limiting price increases. Nevertheless, this latest OPEC move underscores the delicate nature of the energy market.
. Can we just talk about the new iPhone releases instead? I mean, have you guys seen those new camera features? 
I was thinking of getting a new phone but now I'm not sure if it's worth it. What do you think is the best camera phone out there right now? Is the new Samsung one better than the iPhone 14? 
. analysts are warning that it could reignite inflation concerns and send prices way up... $3.80-$3.90 per gallon? that's crazy talk! i guess we'll just have to wait and see how the market plays out 
. And now, with summer coming up, prices might go back up to $3.50 or something? 
I'm not sure how the US is gonna handle this, but I guess we'll have to wait and see what happens 
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. The fact that analysts are already warning about potential price surges to $3.80-$3.90 per gallon by the end of summer is unsettling. We need to be vigilant and monitor the situation closely 
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. As someone who cares about economic policy and energy security, I'll be keeping a close eye on developments 
. And what about all these other factors that can affect the market, like hurricanes or production disruptions in the Gulf Coast? Can we really predict that kind of stuff? 
. like when the government says "we're gonna make you pay more for that fancy coffee" and then they just change their mind 
. seriously though, $3.80-$3.90 per gallon? that's just crazy talk 
. it's like trying to forecast a Kardashian's net worth – good luck with that 
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anyone else think us prices might rise past $3.80 a gallon?