US Gas Prices Set for Sharp Increase as OPEC+ Cuts Production
A surprise move by the Organization of Petroleum Exporting Countries (OPEC+) has sent shockwaves through the global energy market, with oil prices surging and gasoline futures experiencing a significant spike. The cartel's decision to slash its collective production by over 1.6 million barrels per day starting in May will be felt at US gas pumps, leading to higher fuel costs for motorists.
The move, announced on Sunday, has resulted in an immediate impact on wholesale gasoline prices, with RBOB futures increasing by about 8 cents a gallon, or around 3%, in morning trading. This is expected to translate into higher prices for US drivers in the near future.
According to Tom Kloza, global head of energy analysis at OPIS, which tracks gas prices for AAA, OPEC's move will likely "reawaken the inflation monster" and has significant implications for the White House. Kloza believes that US gas prices could rise to $3.80-$3.90 per gallon in relatively short order.
Historically, gas prices have experienced a significant spike following global conflicts, such as Russia's invasion of Ukraine in 2022. At that time, average US regular gas prices reached a record high of $5.02 per gallon before gradually declining over several months.
However, Kloza notes that the current situation is different due to various factors, including the US Strategic Petroleum Reserve (SPR) releases and an increase in US oil production and refining capacity. Nevertheless, OPEC's move will be difficult for the US to counterbalance.
In a recent statement, Kloza stated, "They have the ability to cut production and they seem motivated to do so." This suggests that the cartel is committed to reducing its output and has the capacity to do so. As a result, US drivers may soon face higher gas prices, although there is a possibility that prices could return to pre-pandemic levels if global production disruptions are limited by the summer.
For now, motorists can expect US gas prices to rise significantly following OPEC's decision to cut oil production, with potential price spikes reaching up to $3.80-$3.90 per gallon in the coming weeks and months.
A surprise move by the Organization of Petroleum Exporting Countries (OPEC+) has sent shockwaves through the global energy market, with oil prices surging and gasoline futures experiencing a significant spike. The cartel's decision to slash its collective production by over 1.6 million barrels per day starting in May will be felt at US gas pumps, leading to higher fuel costs for motorists.
The move, announced on Sunday, has resulted in an immediate impact on wholesale gasoline prices, with RBOB futures increasing by about 8 cents a gallon, or around 3%, in morning trading. This is expected to translate into higher prices for US drivers in the near future.
According to Tom Kloza, global head of energy analysis at OPIS, which tracks gas prices for AAA, OPEC's move will likely "reawaken the inflation monster" and has significant implications for the White House. Kloza believes that US gas prices could rise to $3.80-$3.90 per gallon in relatively short order.
Historically, gas prices have experienced a significant spike following global conflicts, such as Russia's invasion of Ukraine in 2022. At that time, average US regular gas prices reached a record high of $5.02 per gallon before gradually declining over several months.
However, Kloza notes that the current situation is different due to various factors, including the US Strategic Petroleum Reserve (SPR) releases and an increase in US oil production and refining capacity. Nevertheless, OPEC's move will be difficult for the US to counterbalance.
In a recent statement, Kloza stated, "They have the ability to cut production and they seem motivated to do so." This suggests that the cartel is committed to reducing its output and has the capacity to do so. As a result, US drivers may soon face higher gas prices, although there is a possibility that prices could return to pre-pandemic levels if global production disruptions are limited by the summer.
For now, motorists can expect US gas prices to rise significantly following OPEC's decision to cut oil production, with potential price spikes reaching up to $3.80-$3.90 per gallon in the coming weeks and months.