OPEC and its allies’ surprising decision to reduce oil production is bound to affect US gas prices. The OPEC+ group recently announced a cut of over 1.6 million barrels of oil per day starting in May until the year’s end. Consequently, this news has caused both Brent crude futures and WTI to surge approximately 6% in Monday’s trading. Gasoline futures were also immediately impacted, with wholesale gasoline prices rising by about 8 cents a gallon or 3% in morning trading.
This development, induced by OPEC’s production cut, will inevitably influence US drivers much quicker than the oil price spike. As the national average gas price hits $3.51 on Monday, experts predict a rise to $3.80 to $3.90 shortly. Fortunately, due to the new OPEC decision, there’s no forecast of returning to the 2022 record of $5 per gallon. Despite the resilience in pricing now, factors like Gulf Coast storms or hurricanes might sway the cost.
While last year’s gas price was $4.19 following the Russia-Ukraine conflict, the recent $3.51 cost is just marginally under the $3.53 average pre-invasion. The consistent decrease in prices last year was supported by the Strategic Petroleum Reserve’s oil release amidst global demand concerns during a potential recession. Presently, reinforced US oil production and refining capacities, along with additional SPR oil releases, are dampening the impact compared to the 2022 record levels. Nonetheless, OPEC+’s 1 million barrels per day cut poses a challenge, with expectations high for sustained decreases in production.
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