OPEC+'s surprise move to slash oil production by over 1.6 million barrels per day starting in May is set to send shockwaves through the global energy market, leading to a spike in US gas prices.
The cut in production will be felt immediately at US gas pumps, with gasoline futures rising about 8 cents a gallon or 3% in morning trading. The impact on US drivers will be more pronounced than the increase in oil prices, as the rise in gasoline futures is passed onto consumers quickly.
Analysts warn that US gas prices could surge to $3.80-$3.90 per gallon in relatively short order, driven by the reduced supply of crude oil. Tom Kloza, global head of energy analysis for OPIS, described OPEC's move as "reawakening the inflation monster," citing a shock to the White House and altering the calculus for economic policy.
The national average for US gas prices stood at $3.51 on Monday, just below the $3.53 average from February 23, 2022, the day before Russia's invasion of Ukraine. Kloza predicts that US drivers could see prices rise above year-earlier levels by the end of summer, particularly if there are disruptions to production in the Gulf Coast.
However, the analyst notes that while OPEC has the ability to cut production and seems motivated to do so, the impact on global energy markets will be significant. The US Strategic Petroleum Reserve is set to release additional oil, which should help stabilize prices. Nevertheless, Kloza warns that a cut of 1 million barrels per day in oil production by OPEC+ will not be easily offset.
The news comes as gas prices were just below record levels in 2022, driven by the invasion of Ukraine and resulting disruptions to global energy markets. However, with the US having increased its oil production and refining capacity, Kloza notes that prices are unlikely to reach $5 per gallon or higher.
The cut in production will be felt immediately at US gas pumps, with gasoline futures rising about 8 cents a gallon or 3% in morning trading. The impact on US drivers will be more pronounced than the increase in oil prices, as the rise in gasoline futures is passed onto consumers quickly.
Analysts warn that US gas prices could surge to $3.80-$3.90 per gallon in relatively short order, driven by the reduced supply of crude oil. Tom Kloza, global head of energy analysis for OPIS, described OPEC's move as "reawakening the inflation monster," citing a shock to the White House and altering the calculus for economic policy.
The national average for US gas prices stood at $3.51 on Monday, just below the $3.53 average from February 23, 2022, the day before Russia's invasion of Ukraine. Kloza predicts that US drivers could see prices rise above year-earlier levels by the end of summer, particularly if there are disruptions to production in the Gulf Coast.
However, the analyst notes that while OPEC has the ability to cut production and seems motivated to do so, the impact on global energy markets will be significant. The US Strategic Petroleum Reserve is set to release additional oil, which should help stabilize prices. Nevertheless, Kloza warns that a cut of 1 million barrels per day in oil production by OPEC+ will not be easily offset.
The news comes as gas prices were just below record levels in 2022, driven by the invasion of Ukraine and resulting disruptions to global energy markets. However, with the US having increased its oil production and refining capacity, Kloza notes that prices are unlikely to reach $5 per gallon or higher.
this opec+ thingy is gonna mess up our gas prices so bad! i mean, 8 cents a gallon is already crazy but 3%?? 
that's like, a whole lot of extra cash for us drivers 
. and Kloza says the inflation monster is gonna come back?!? 
like, i know opec+ has the power to cut production but 1.6 million barrels a day is still a lotta oil 
. i hope our strategic petroleum reserve can keep up tho 
. I mean, what's the deal? Can't they just, like, magically make more oil appear or something? Nah, gotta slash production by 1.6 million barrels a day... that's like, whoa! 
It's like, they're gonna release some oil from that Strategic Petroleum Reserve... yaaas, let's hope it stabilizes prices a bit 
. But Kloza's all like "cut production won't be easily offset"... okay, got it, OPEC 
.
OPEC's cut is a big deal, and it's not just about US drivers feeling the pinch 
. The whole global market will feel it, and prices could skyrocket 
. I'm talking like $3.80-$3.90 per gallon, which is crazy expensive 
. But, on the bright side, the US has more oil production capacity now than before 
. Maybe it'll help offset the cut? 
Still, I'm not optimistic 
. The economy is already feeling the pinch, and this could be another blow 
.
.
. But, it's not a magic solution. We need to focus on diversifying our energy sources and investing in cleaner, more sustainable options 
. Maybe this surprise move will finally get us talking about the need for change 
.
. hopefully those 1.6 million barrels per day will make a difference, or we'll be stuck with $4+ gas prices for months to come 
. Can't they just use a decent grid template? The layout is all over the place. And what's with the short paragraphs? It's like they're trying to make it as hard as possible for me to scan the content 
. Maybe a sidebar or an infographic?
. It makes a big difference when you're trying to read a news article without getting overwhelmed 
like what's next? sky-high gas prices? how're people s'posed to afford that? i heard the US is still reeling from last year's invasion of ukraine, and now we gotta deal with another price hike? 
But seriously though this is gonna affect US drivers hard and I'm not just talking about the price spike 
. My fave thing to do on a Friday night (after a long week of work) is cruising around with friends, but now that might get more expensive 
I'm not sure if it'll reach those levels, but I do know one thing - my wallet's about to get a serious beating 
. First, it's OPEC+ slashing their oil production, then BAM! Gas prices skyrocket like a shot 
. This is all too convenient, if you ask me 
.
We're not just numbers and statistics, we're real people who need affordable gas prices.
. analysts are warnin' that prices could hit $3.80-$3.90 by summer and that's even before any potential disruptions in the gulf coast 
I'm not buying that the reserve is gonna save us though... we all know how that works out