The recent surprise announcement by OPEC and its allies to reduce oil production is expected to impact gas prices in the US. This move by OPEC+ to cut oil production by over 1.6 million barrels a day from May through the end of the year has caused Brent crude futures and WTI to increase by approximately 6% in Monday’s trading.
This reduction in oil production will also have a direct and swift effect on gasoline futures, which will be reflected in higher prices for US drivers. The wholesale gasoline price, RBOB, saw an increase of around 8 cents per gallon, or about 3%, in morning trading.
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With the national average for US gas prices at $3.51 on Monday, there is a prediction that it might rise to $3.80 to $3.90 due to OPEC’s decision. Despite this increase, it is unlikely that prices will reach the historic high of $5 a gallon, similar to what occurred in 2022 following the events in Ukraine.
The average price of regular gas in the US was $4.19 a gallon a year ago, after Russia’s invasion of Ukraine impacted global energy markets. We witnessed a slow decline to $3.51 recently, which is just below the average price before the invasion.
Although the US plans to release more oil from the Strategic Petroleum Reserve and has increased oil production and refining capacity, it will still be challenging to make up for the 1 million barrels per day reduction from OPEC+. As gas prices fluctuate, it is essential to stay informed and consider various factors that may influence the market.
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