OPEC+ Slashes Oil Production, Sends US Gas Prices Soaring
The Organization of the Petroleum Exporting Countries (OPEC) and its allies announced a surprise move on Sunday to slash oil production by more than 1.6 million barrels per day starting in May, marking a significant shift in global energy markets.
The decision is expected to have a direct impact on US gas prices, with Brent crude futures and WTI, the US benchmark, seeing a significant spike of around 6% in trading on Monday. This, in turn, has led to an increase in gasoline futures, which will be passed onto US drivers much more quickly than the spike in oil prices.
Energy analyst Tom Kloza from OPIS predicts that OPEC's move could send US gas prices up to $3.80 to $3.90 in relatively short order, surpassing last year's average price of $3.51 per gallon. Kloza notes, however, that despite this increase, the national average is still below its record high of around $5.02 a gallon set in June 2022.
According to Kloza, OPEC's move will be a significant blow to the US economy, with many experts warning that it could reignite inflation concerns. "I think OPEC is reawakening the inflation monster," said Kloza. "The White House has to be shocked and major-time pissed."
Despite this, there are some factors that could mitigate the impact of OPEC's move. The US Strategic Petroleum Reserve (SPR) plans to release additional oil supplies, which will help to offset the decrease in production. Additionally, US oil production and refining capacity have increased since 2022.
However, Kloza notes that the reduction in oil supply by OPEC+ is a significant challenge for the market, particularly given the group's ability to cut production and their motivation to do so. "They have the ability to cut production and they seem motivated to do so," he said.
Overall, the implications of OPEC's move on US gas prices are uncertain, but one thing is clear: consumers can expect higher fuel costs in the coming months.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies announced a surprise move on Sunday to slash oil production by more than 1.6 million barrels per day starting in May, marking a significant shift in global energy markets.
The decision is expected to have a direct impact on US gas prices, with Brent crude futures and WTI, the US benchmark, seeing a significant spike of around 6% in trading on Monday. This, in turn, has led to an increase in gasoline futures, which will be passed onto US drivers much more quickly than the spike in oil prices.
Energy analyst Tom Kloza from OPIS predicts that OPEC's move could send US gas prices up to $3.80 to $3.90 in relatively short order, surpassing last year's average price of $3.51 per gallon. Kloza notes, however, that despite this increase, the national average is still below its record high of around $5.02 a gallon set in June 2022.
According to Kloza, OPEC's move will be a significant blow to the US economy, with many experts warning that it could reignite inflation concerns. "I think OPEC is reawakening the inflation monster," said Kloza. "The White House has to be shocked and major-time pissed."
Despite this, there are some factors that could mitigate the impact of OPEC's move. The US Strategic Petroleum Reserve (SPR) plans to release additional oil supplies, which will help to offset the decrease in production. Additionally, US oil production and refining capacity have increased since 2022.
However, Kloza notes that the reduction in oil supply by OPEC+ is a significant challenge for the market, particularly given the group's ability to cut production and their motivation to do so. "They have the ability to cut production and they seem motivated to do so," he said.
Overall, the implications of OPEC's move on US gas prices are uncertain, but one thing is clear: consumers can expect higher fuel costs in the coming months.
. Energy analyst Tom Kloza is saying that this could send US gas prices up to $3.80-$3.90 per gallon which is crazy, especially since we're already seeing a 6% spike in oil prices 
. I don’t know if it’s just me but why do energy markets always have to be so volatile? It's like they can't even make up their minds 
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like i get why ppl r mad bout this oil price spike tho its not exactly fair 2 us consumers considering opec+ did cut production 2 "manage supply" & all that jazz but still, $3.80 a gallon is a lil steep 4 some ppl who just wanna drive around without breaking the bank 
How about they cut production for everyone not just America? 
We should be working together on this energy thingy 
Not piling more costs on people already struggling financially 
. But at the same time, I think the SPR releasing more oil supplies will help somewhat, and our increased oil production shouldn't completely mitigate the impact. It's just one of those things that we'll have to get used to for a while 
I'm not buying into all this fuss about OPEC cutting oil production and gas prices skyrocketing 
. And let's be real, the US has its own oil production and refining capacity to catch up on lost ground 
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- it's all about balancing the books for them. I'm not convinced that this move is as bold as everyone's making it out to be 
. It's gonna take more than just a 1.6 million barrel reduction to send gas prices into the stratosphere 
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It's gotta be tough on American wallets, right? 
It'll be interesting to see how the White House handles this one...