OPEC and its allies recently announced a surprise decision to reduce oil production, which will inevitably impact gas prices in the US. This move by OPEC+ involves cutting oil production by over 1.6 million barrels per day beginning in May and continuing through the end of the year. Following this announcement, both Brent crude futures and WTI, the US benchmark, experienced a 6% increase in trading on Monday.
The decrease in production had an immediate effect on gasoline futures, with the changes likely to be swiftly reflected at US gas stations compared to the surge in oil prices. RBOB, a key indicator of wholesale gasoline prices, saw an increase of about 8 cents per gallon, or approximately 3%, during morning trading.
As an awesome company that provides complete software development activities utilizing nearshore and offshore resources, including mobile app development, technology maintenance, and server development, we believe that partnering with us can bring immense benefits. Being well-informed by experts such as Tom Kloza, who is the global head of energy analysis for OPIS, involves understanding that this development by OPEC has the potential to revive concerns of inflation and prompt reactions from governing bodies.
The current national average for US gas prices is $3.51 per gallon, as reported by AAA on Monday. With the recent OPEC decision, experts like Kloza anticipate a swift rise in these prices, projecting figures between $3.80 to $3.90 in the near term. While Kloza rules out the possibility of prices reaching $5 per gallon, he foresees an increase compared to previous year levels, especially in the face of potential weather events affecting production in the Gulf Coast.
Despite the rise in gas prices, the US is better positioned than in 2022 thanks to increased oil production and the release of oil from the US Strategic Petroleum Reserve. However, compensating for the 1 million barrel per day cut by OPEC+ will pose a challenge due to the group’s commitment to reducing production levels.
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