New York (CNN) The sudden move by OPEC and its allies to cut oil production will soon be seen at US gas pumps.
The group known as OPEC+ announced on Sunday that it would do so Reducing oil production With more than 1.6 million barrels per day from May until the end of the year. The news sent both Brent crude futures, the global oil benchmark, and WTI, the US benchmark, up 6% in Monday’s trading.
The production cut announcement also had an immediate impact on gasoline futures, which would be passed on to American drivers much more quickly than the sharp rise in oil prices. RBOB, the closely watched wholesale gasoline price, rose about 8 cents a gallon, or about 3%, in morning trade.
“I think OPEC is reawakening the inflation monster,” said Tom Kloza, global head of energy analysis at AAA, which tracks gas prices. The White House must have been shocked and outraged for a long time. He’s definitely been changing calculus for quite some time. “
According to AAA, the national average for US gas prices was $3.51 on Monday. Kloza said he may see it rise from $3.80 to $3.90 in a relatively short time thanks to OPEC’s move.
“We’re not going back to $5 a gallon. I don’t think we’re going to go up to $4,” he said. But he said that by summer’s end, U.S. drivers may be back above their rates from a year ago, especially if a hurricane or other storm affects production along the Gulf Coast.
The average price of regular gas in the United States a year ago was $4.19 a gallon in the wake of the Russian invasion of Ukraine and the turmoil it caused in global energy markets. Prices finally reached a Record $5.02 per gallon on June 14before beginning a slow but steady decline over the course of more than three months The average price decreased every day. The decline was partly driven by the release of oil from US Strategic Petroleum ReserveAnd partly because fears of a US or global recession have reduced demand for gasoline.
Even at $3.51, US gas prices were just below the average of $3.53 on February 23, 2022, the day before Russia invaded Ukraine.
One of the things keeping prices from approaching record levels for 2022, Kloza said, is that the US is planning additional issues from the Strategic Petroleum Reserve, and US oil production and refining capacity are soaring. But it will not be easy to compensate for the OPEC + cut of 1 million barrels per day of oil.
“They have the ability to cut production and they seem motivated to do so,” he said.
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