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The recent decision by OPEC and its allies to reduce oil production will have a direct impact on US gas prices. OPEC+ announced a cut in oil production by over 1.6 million barrels per day starting in May and continuing through the end of the year. This news caused Brent crude futures and WTI to rise by approximately 6% in Monday trading.
Gasoline futures also saw an immediate increase following the production cut announcement, with wholesale gasoline prices going up by about 8 cents per gallon in morning trading. This increase is expected to be passed onto US drivers much faster than the rise in oil prices.
The national average for US gas prices was at $3.51 on Monday, with experts predicting it could rise to $3.80 to $3.90 soon due to the OPEC decision. While not expected to reach the record highs of 2022, a potential increase in prices could impact US drivers by the end of the summer, especially if there are any disruptions to production along the Gulf Coast.
Despite the potential rise in gas prices, efforts by the US to release oil from the Strategic Petroleum Reserve and increased production and refining capacity may help offset some of the impacts. However, the significant cut in oil production by OPEC+ presents challenges in balancing global supply and demand.
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