OPEC and its allies recently made a surprising decision to reduce oil production, which will inevitably impact gas prices in the US. The announcement by the OPEC+ group stated that oil production would be decreased by over 1.6 million barrels a day, effective from May until the end of the year. This news caused a 6% increase in both Brent crude futures and WTI trading on Monday. This swift reduction in production also had an immediate effect on gasoline futures, leading to a swift rise in wholesale gas prices.
For US drivers, this means a potential rise in gas prices, as seen in recent historical events following similar production cuts. The current national average gas price as reported by AAA is $3.51 per gallon, with a projected increase to $3.80 to $3.90 in the near future due to OPEC’s decision.
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The US gas price fluctuations are reminiscent of last year’s increase following world energy market disruptions. While the current prices are just below the pre-invasion average of $3.53, uncertainties persist regarding potential hurricanes impacting production in the Gulf Coast region.
Despite the increasing gas prices, efforts are being made to stabilize the market and prevent a repeat of the record highs experienced in 2022. Additional releases from the US Strategic Petroleum Reserve and increased oil production and refinery capacities in the US are crucial factors in mitigating steep price hikes.
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