OPEC+'s surprise decision to slash oil production by over 1.6 million barrels a day will likely send US gas prices soaring, exacerbating inflation concerns. The move, announced on Sunday, has already sparked a significant increase in Brent crude futures and WTI, the US benchmark, with both rising around 6% in trading Monday.
The immediate impact of this production cut will be felt at US gas pumps, where gasoline futures have surged by about 8 cents a gallon, or around 3%, in morning trading. According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, "I think OPEC is reawakening the inflation monster." The White House is likely to be concerned about this development, as it alters the economic calculus and could lead to higher gas prices.
Currently, the national average for US gas prices stands at $3.51, according to AAA. Kloza predicts that prices could jump to $3.80 or even $3.90 in a relatively short period of time due to OPEC's move. However, he also notes that it's unlikely prices will reach record levels of $5 a gallon, which were seen last year following Russia's invasion of Ukraine and the subsequent energy market disruptions.
Kloza believes that US drivers may see prices return to year-earlier levels by the end of summer, especially if there are hurricanes or other storms affecting production along the Gulf Coast. Nevertheless, even at lower prices, gas prices remain close to pre-pandemic levels, with Monday's average being just below the $3.53 average on February 23, 2022.
The US Strategic Petroleum Reserve is also expected to play a role in mitigating price increases, as the Biden administration plans additional releases from the reserve. Additionally, US oil production and refining capacity have increased, which should help offset some of the effects of OPEC's move. However, Kloza notes that reducing oil supply by 1 million barrels a day will not be easy to compensate for.
Despite these mitigating factors, Kloza acknowledges that OPEC+ has the ability to cut production and seems motivated to do so. The implications of this decision are likely to be far-reaching, with inflation concerns rising as gas prices increase.
The immediate impact of this production cut will be felt at US gas pumps, where gasoline futures have surged by about 8 cents a gallon, or around 3%, in morning trading. According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, "I think OPEC is reawakening the inflation monster." The White House is likely to be concerned about this development, as it alters the economic calculus and could lead to higher gas prices.
Currently, the national average for US gas prices stands at $3.51, according to AAA. Kloza predicts that prices could jump to $3.80 or even $3.90 in a relatively short period of time due to OPEC's move. However, he also notes that it's unlikely prices will reach record levels of $5 a gallon, which were seen last year following Russia's invasion of Ukraine and the subsequent energy market disruptions.
Kloza believes that US drivers may see prices return to year-earlier levels by the end of summer, especially if there are hurricanes or other storms affecting production along the Gulf Coast. Nevertheless, even at lower prices, gas prices remain close to pre-pandemic levels, with Monday's average being just below the $3.53 average on February 23, 2022.
The US Strategic Petroleum Reserve is also expected to play a role in mitigating price increases, as the Biden administration plans additional releases from the reserve. Additionally, US oil production and refining capacity have increased, which should help offset some of the effects of OPEC's move. However, Kloza notes that reducing oil supply by 1 million barrels a day will not be easy to compensate for.
Despite these mitigating factors, Kloza acknowledges that OPEC+ has the ability to cut production and seems motivated to do so. The implications of this decision are likely to be far-reaching, with inflation concerns rising as gas prices increase.
i mean, we go from $3.51 a gallon to $5 a gallon and back down again every few years. what's really going on here? are we just being played by the big players in the energy market? and all this fuss about inflation concerns... can't we just focus on getting people out of debt instead? 
It's gonna send gas prices through the roof and give 'em the upper hand in the global energy game.
. Mark my words, there's more to this story than meets the eye.
! OPEC+'s surprise move is gonna blow up US gas prices big time! $3.80/gallon or even higher? That's crazy talk! 
Interesting how the White House is watching this closely, but they might not be able to control it. The US reserve could help a bit, but I don't think 1 million barrels/day is enough. Summer should bring some relief if there are hurricanes and all that...
... $3.51 is like ancient history now 
... people say a lot about OPEC's move, but what really matters is how it affectin' people's wallets 
. I'm not sure what's going on with these oil producers and their mysterious decisions, but I do know that it's gonna affect us, the consumers. Prices are already rising, so when they hit $3.80 or even $3.90 a gallon? Forget about it... we'll be like people back in 2008, all worried about their gas money 
.
. The White House is probably gonna be like "um, what do we do now?" 
. I think it's safe to say inflation concerns are about to get a whole lot worse 
. But on the bright side, our economy might finally start growing again 
and that's gotta be a good thing, right? 
we need to start thinking about the bigger picture here and not just focus on short-term gains 
. The US is already feeling the pinch with inflation, and this latest move by OPEC+ just adds fuel to the fire 
. I'm not saying it's all doom & gloom though - those US refiners are working overtime to keep up with demand, and the SPR is ready to jump in when needed 
... but for now, let's just say I'm holding my breath 
waiting to see how this all plays out 
. I'm not saying prices will never drop again, but we need to see some serious action on both sides of the table - production and consumption. It's like a delicate balance that's been knocked off, and now it's anyone's game 
. I mean, $3.80-$3.90 a gallon? That's crazy talk! 
It's like they're playing some kinda sadistic game with our wallets 
We're already paying more for gas than we did during the pandemic 
.
. Maybe Tom Kloza is right and prices will go back down by summer 
. But until then, let's just hope that US drivers are prepared for some serious sticker shock 
!
and it's not like they're gonna magically lower production again 
the white house needs to step in ASAP 
.
. And Kloza mentions that gas prices might drop by summer? That's assuming no more OPEC cuts and all that jazz 
like, it was already getting out of control and now they're just adding fuel to the fire 
but at the end of summer, maybe prices will go back down? 