OPEC and its allies’ surprising decision to reduce oil production will soon have an impact on fuel prices at US gas stations. The group, also known as OPEC+, revealed on Sunday that they would decrease oil production by over 1.6 million barrels per day, effective May through the end of the year. This announcement led to a 6% increase in both Brent crude futures, the global oil benchmark, and WTI, the US benchmark, during Monday’s trading session.
The impact of the production cut was instantly felt in gasoline futures, which will be transmitted to US motorists much faster than the rise in oil prices. RBOB, the most closely observed wholesale gasoline price, rose by about 8 cents per gallon, or nearly 3%, during morning trading.
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Tom Kloza, global head of energy analysis for OPIS, remarked, “I think OPEC is reawakening the inflation monster. The White House must be shocked and majorly irritated. It certainly changes the game plan for a while.” The national average for US gas prices on Monday was $3.51, according to AAA. Kloza predicted the price could swiftly rise to $3.80 to $3.90 due to OPEC’s decision.
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Although prices are not anticipated to hit the record highs of 2022 at $5.02 a gallon, Kloza highlighted that US drivers might see prices surpassing last year’s levels, particularly if natural disasters in the Gulf Coast affect production. He also noted that additional releases from the US Strategic Petroleum Reserve and increased US oil production and refining capacity could help offset the impact of OPEC’s oil cut.
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