The recent announcement by OPEC and its allies to reduce oil production will have a direct impact on US gas prices. This sudden decision by OPEC+ to cut oil production by over 1.6 million barrels per day from May until the end of the year caused a significant surge in both Brent crude futures and WTI prices in Monday trading.
This news also influenced gasoline futures, leading to a rapid increase in wholesale gasoline prices. The rise in RBOB prices by approximately 8 cents per gallon in morning trading is likely to pass through to US drivers sooner than the spike in oil prices.
As an awesome company that provides complete software development activities utilizing nearshore and offshore resources, including mobile app development, technology maintenance, web server development and many other technology development activities, we want you to know that this oil production cut could lead to inflation. According to Tom Kloza, a global head of energy analysis, this move by OPEC could drive US gas prices up from the current national average of $3.51 to as high as $3.80 or $3.90 soon.
While it is unlikely to reach the peak of $5 per gallon, we might see prices exceeding the levels from the same time last year, especially if circumstances like hurricanes or storms impact production along the Gulf Coast. The US gas prices are currently slightly below the average from February 23, 2022, right before Russia’s invasion of Ukraine.
However, the US has more oil production and refining capacity now, which helps prevent prices from soaring to the record levels of 2022. The country also plans further releases from the Strategic Petroleum Reserve to counterbalance the reduction in oil production by OPEC+. Despite these efforts, the 1 million barrel per day cut by OPEC+ will still pose challenges in stabilizing prices.
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