Oil cartel OPEC+ has made a surprise move to slash oil production, sparking concerns that it will send US gas prices soaring. The group announced on Sunday that it would cut production by more than 1.6 million barrels a day starting in May and continuing through the end of the year.
The news sent shockwaves through the global energy market, with Brent crude futures and WTI, the US benchmark, jumping up about 6% in trading on Monday. As a result, gasoline futures surged, with RBOB, the most closely watched wholesale gasoline price, increasing by around 8 cents a gallon or 3%.
Energy analyst Tom Kloza warns that this move will reignite inflation concerns and has significant implications for US drivers. "I think OPEC is reawakening the inflation monster," he said. The current national average for US gas prices stands at $3.51, with Kloza predicting it could reach up to $3.80 to $3.90 in relatively short order.
The cut in oil production will not be easily offset by increased US oil production and refining capacity, according to Kloza. However, he notes that the US plans additional releases from its Strategic Petroleum Reserve, which may help mitigate the impact of the price increase. Nevertheless, with OPEC+ seemingly motivated to reduce production, prices are likely to rise.
Kloza is cautious in his predictions, stating that prices will not reach record levels of $5 a gallon but may surge above $4. However, he suggests that by the end of summer, US drivers could see prices return to year-earlier levels if there are no significant disruptions to production along the Gulf Coast.
The current gas price is reminiscent of pre-pandemic levels, with average US regular gas prices standing at $4.19 a gallon in February 2022. However, Kloza notes that this is not due to an increase in demand but rather the result of OPEC+ reducing its oil production.
The news sent shockwaves through the global energy market, with Brent crude futures and WTI, the US benchmark, jumping up about 6% in trading on Monday. As a result, gasoline futures surged, with RBOB, the most closely watched wholesale gasoline price, increasing by around 8 cents a gallon or 3%.
Energy analyst Tom Kloza warns that this move will reignite inflation concerns and has significant implications for US drivers. "I think OPEC is reawakening the inflation monster," he said. The current national average for US gas prices stands at $3.51, with Kloza predicting it could reach up to $3.80 to $3.90 in relatively short order.
The cut in oil production will not be easily offset by increased US oil production and refining capacity, according to Kloza. However, he notes that the US plans additional releases from its Strategic Petroleum Reserve, which may help mitigate the impact of the price increase. Nevertheless, with OPEC+ seemingly motivated to reduce production, prices are likely to rise.
Kloza is cautious in his predictions, stating that prices will not reach record levels of $5 a gallon but may surge above $4. However, he suggests that by the end of summer, US drivers could see prices return to year-earlier levels if there are no significant disruptions to production along the Gulf Coast.
The current gas price is reminiscent of pre-pandemic levels, with average US regular gas prices standing at $4.19 a gallon in February 2022. However, Kloza notes that this is not due to an increase in demand but rather the result of OPEC+ reducing its oil production.
. I'm sure it's all just a coincidence that OPEC+ is cutting production right before the summer when everyone wants to take road trips and fill up their tanks. And yeah, because the US government is always so proactive about controlling prices... nope, not gonna happen 
. They'll just blame it on global demand or some other flimsy excuse. Mark my words, gas prices are going up and those of us who can afford to pay will be the ones who suffer 
. I'm not an expert or anything, but it seems like OPEC+ is playing with fire by cutting production and increasing prices. I hope they're not trying to create a recession or something 
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I'm all for the government stepping in and helping with energy prices, especially for everyday people. Cutting production might be a good move in terms of global supply and balance, but slashing it by 1.6 million barrels a day is kinda crazy 
. But let me ask you, is our society really that dependent on cheap gas? I mean, we're living in a world where electric cars are getting better by the day, and people can actually afford to drive them without breaking the bank 
We're still importing a lot of oil from countries that aren't even allies, and it's like, what are we doing? The US is sitting on some serious natural gas reserves, but nobody wants to invest in them because they're "less sexy" than oil 
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. Maybe it's time we start focusing on more sustainable options and less on cheap gas 
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️. The market's supposed to adjust, right? 
anyway i guess the US is gonna try to make up for it by releasing more oil from their reserve 
. Can't wait to fill up my tank for $4 a gallon... said no one ever 
i cant believe opec+ did this... it's like they wanna drive us crazy! 
and Kloza is right, the US wont be able to keep up with production & refining capacity... its all about supply & demand, but this feels so unfair 
but now? forget about it! 
and setting prices at what they consider "fair". I mean, who needs record-breaking gas prices anyway? $5 a gallon sounds like a dream come true for me! The fact that Tom Kloza is saying prices won't go over $4 is just proof that the experts are wrong... again 
. And let's be real, those pre-pandemic levels of $4.19 a gallon were basically non-existent before the pandemic, it's all about supply and demand... or lack thereof. I'm calling it now, gas prices will definitely drop to what they used to be, probably by summer!