Experience the impact of OPEC and its allies as they make a significant cut in oil production, affecting US gas prices. OPEC+ recently announced a reduction of over 1.6 million barrels per day starting in May, continuing until the end of the year. This development caused both Brent crude futures and WTI to increase by roughly 6% during Monday’s trading session.
The influence of the production cut isn’t just limited to oil prices. Gasoline futures surged as well, reflecting an immediate change that will be passed on to US drivers much sooner compared to the oil price surge. RBOB, a key indicator of wholesale gasoline prices, saw an increase of about 8 cents per gallon, approximately 3%, in morning trading.
At $3.51, the national average for US gas prices on Monday, as per AAA. With OPEC’s decision, industry experts project a possible rise to $3.80 to $3.90 in the near future. While we may not see a return to $5 per gallon, it’s likely that prices will climb above year-earlier levels by the end of the summer, especially if weather events disrupt production along the Gulf Coast.
Stay informed – last year, gas prices surged to $4.19 a gallon following Russia’s invasion of Ukraine. The figure escalated to a record $5.02 a gallon on June 14. However, concerns of a potential recession and the release of oil from the US Strategic Petroleum Reserve gradually lowered prices over time.
Despite the current average of $3.51, gas prices are inching close to the $3.53 average from February 23, 2022, just before the Ukraine conflict began. The US is prepared with additional Strategic Petroleum Reserve releases and increased oil production and refining capabilities. However, compensating for OPEC’s 1 million barrel per day cut will be challenging.
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