Rewakening the ‘inflation monster,’ OPEC+ moves to send US gas prices higher | CNN Business

Oil-producing cartel OPEC+ has made a surprise move to slash global oil output by over 1.6 million barrels per day, starting in May. This sudden reduction is expected to send shockwaves through the energy market and further fuel inflationary pressures on US gas prices.

As news of the production cut spread, Brent crude futures and WTI rose sharply, jumping around 6% in trading on Monday. The impact on gasoline futures was even more pronounced, with wholesale RBOB prices increasing by about 8 cents per gallon, or around 3%, in morning trading.

Analysts are warning that this development could reignite the "inflation monster" and push US gas prices significantly higher. Tom Kloza, global head of energy analysis for OPIS, a tracking firm for AAA, believes the move by OPEC+ will alter the calculus for policymakers and send prices surging to around $3.80 to $3.90 per gallon in relatively short order.

Kloza notes that while the US has been fortunate so far due to its strategic petroleum reserve releases and increasing oil production and refining capacity, a cut of 1 million barrels per day is not easy to make up for. He expects prices to stay above year-earlier levels until at least the end of summer, with potential spikes if severe storms affect Gulf Coast production.

Historically, US gas prices have been much higher, reaching a record $5.02 per gallon in June 2022 following Russia's invasion of Ukraine and subsequent energy market disruptions. However, Kloza believes that even at current levels, around $3.51, US prices are still not far from the pre-invasion average of $3.53 on February 23, 2022.

The OPEC+ move has raised eyebrows among policymakers, who must now navigate a rapidly changing energy landscape. With production cuts in place, it remains to be seen how quickly and decisively markets will adjust to the new reality.

Just got slammed with higher gas prices again The OPEC+ cut is gonna keep prices stuck at $3+ for ages I'm so over this inflation monster...

Ugh, dont no what's gonna happen 2 gas prices !! OPEC+ is all like "we'rea gonna cut oil output" and suddenly everyone's stockin up and prices are through the roof ! Like, i get it, we need to reduce consumption but 1.6 MILLION BARRELS A DAY? thats a lotta oil !! Kloza says its like "we cant make this up" lol what does he mean by that? Like, didnt we just get all the oil we needed from those strategic reserves? and btw $3.80-3.90 GALLON?! thats like, crazy talk !

just saw that news about opec+'s surprise oil output cut... its gonna be super tough on gas prices i mean we're already struggling with inflation what's next? a 6% jump in brent crude futures is crazy and now analysts are saying prices could reach $3.80 to $3.90 per gallon by summer?! that's insane! the good news for us is our strategic petroleum reserve, but Kloza says it won't be enough to offset a 1 million barrel cut... not good!

I'm not buying into this "inflation monster" hype just yet . I mean, we've been through worse, right? Like, remember when Russia invaded Ukraine and oil prices skyrocketed? Yeah, that was crazy . But did it last forever? Nope! The market adjusted, and prices came back down.

I think this OPEC+ move is more like a knee-jerk reaction to the whole pandemic thing . They're trying to regain control over the energy landscape after all those years of being stuck in a price war with shale oil producers. But let's be real, we can't just ignore the fact that US production and refining capacity are increasing like crazy .

And what about them strategic petroleum reserve releases? Aren't they kinda like a Band-Aid on a bullet wound ? They're gonna help for a hot second, but then prices will find another way to rise. I'm not saying it's gonna be easy, but I don't think we'll see prices go back up to $5.02 anytime soon . The market has too much momentum on its side right now!

OMG u guys i cant even just heard about opec+ slashing global oil output by 1.6 million barrels per day!!! this is gonna send shockwaves through the energy market for sure and inflationary pressures on us gas prices are gonna go thru the roof like, whoa! analysts r saying we can expect prices to surge like $3.80-$3.90 per gallon by summer and i gotta say, thats not too far off from pre-ukraine invasion levels what a nightmare

I'm not surprised by this development . The global energy market is already on edge due to geopolitical tensions and supply chain disruptions . OPEC+ has been playing a crucial role in balancing the world's oil production, and their decision to slash output is likely aimed at maintaining their influence . While it's concerning that this move could reignite inflationary pressures on US gas prices ️, I think policymakers will take a nuanced approach .

The impact of this cut will be felt across the globe, from Europe to Asia, and it'll be interesting to see how markets adjust to the new reality . One thing is certain – this move will send shockwaves through the energy sector and force us to reevaluate our dependence on fossil fuels .

It's also worth noting that the US has been fortunate so far due to its strategic petroleum reserve releases . However, as Tom Kloza points out, a cut of 1 million barrels per day is no easy feat to make up for . I expect prices to stay above year-earlier levels until at least the end of summer .

This move also highlights the complexities of global energy politics . With production cuts in place, it remains to be seen how quickly and decisively markets will adjust to the new reality . One thing is certain – this development will have far-reaching consequences for the global economy .

I'm telling ya, this is gonna be a wild ride . I mean, 1.6 million barrels per day? That's like taking a huge chunk outta the global oil supply . And now US gas prices are just gonna go through the roof . I'm not buying that it'll "alter the calculus" for policymakers . It's just another way for OPEC+ to stick it to the West . Mark my words, we're lookin' at $3.80-$3.90 per gallon by summer . And don't even get me started on the Gulf Coast production issues . This is gonna be a hot mess .

So this is like, crazy right? I mean, one day we're dealing with super low oil prices and next thing you know OPEC+ is slashing output by over 1.6 million barrels per day . I'm not surprised that it's sending shockwaves through the energy market and fueling inflationary pressures on US gas prices. It's like, we already knew that oil prices were going to be a major issue with the US economy right now.

I'm also kinda worried about what this means for policymakers . They're gonna have to make some tough decisions about how to navigate this rapidly changing energy landscape and figure out ways to keep gas prices from getting too out of control. And honestly, it's hard to say what the outcome is going to be without seeing how quickly and decisively markets will adjust to these new production cuts .

I mean, we've been lucky so far that the US has had its strategic petroleum reserve releases and oil production and refining capacity have gone up . But a 1 million barrel per day cut isn't something you can just make up for overnight . So yeah, I'm expecting prices to stay above last year's levels until at least the end of summer, with potential spikes if there are severe storms affecting Gulf Coast production .

I just can't believe the news about OPEC+'s surprise oil output cut . It's like they're putting a huge speed bump on the energy market's road trip . The prices are going up, and we all know what that means... inflation . I'm still trying to wrap my head around it. I mean, 6% in just one day? That's wild . And with the US having a strategic petroleum reserve release already, things might get really ugly if severe storms hit the Gulf Coast . Tom Kloza seems right on the money about prices staying above last year's levels until at least summer . My wallet is already getting anxious .

Umm... this is wild ! So they're just gonna cut oil output by 1.6 million barrels per day out of nowhere? How's that supposed to work? I mean, I get it, OPEC+ wants to boost prices and all that jazz, but isn't this like, a big risk? What if the world just doesn't wanna pay more for gas?

I'm also kinda curious, what's with all these numbers? Like, 6% jump in Brent crude futures and 3% increase in wholesale RBOB prices... how much of an actual price hike is that gonna translate to at the pump? And what about those analysts saying $3.80-$3.90 per gallon? Is that like, a realistic expectation or just some wild guess?

And don't even get me started on the US's strategic petroleum reserve releases and oil production capacity... I thought we were all good after those reserve releases? Or is this just another wild card in the energy market?

I'm so done with oil prices right now ! I mean, I know OPEC+ is trying to control the global supply, but seriously, can't they just chill for a sec? A 6% jump in Brent crude futures and US gas prices are already through the roof . And analysts are saying we might see $3.80-$3.90 per gallon soon? That's like, totally not fair to all the people who are just trying to make ends meet on their daily commute .

I remember when I was in college and gas prices were around $2.50 per gallon... it was like a dream come true! Now, it's like they're trying to drain our wallets or something . And what really gets me is that OPEC+ thinks we can just absorb this shock without anything being done? Like, policymakers are supposed to be all over this and figure out some magic solution . We'll see about that...

Oil prices are about to get real crazy again, I'm not surprised . OPEC+ just slashed global oil output and now everyone's freaking out . It's like they're playing a game of "inflation roulette" where you never know when the price is gonna spike .

I mean, we've been lucky so far with our strategic petroleum reserve releases and all that , but this cut is huge ️. One million barrels per day is not easy to make up for, Tom Kloza is right on the money . I'm expecting prices to stay above last year's levels until at least the end of summer, and maybe even spike higher if there are any issues with Gulf Coast production .

It's like the energy market is this crazy rollercoaster that we can't get off of . US gas prices have been relatively low lately, but they're not far from where they were pre-Ukraine invasion . I'm just waiting to see how quickly markets adjust to this new reality .

just think about it, they're cutting oil production by 1.6 million barrels a day... that's crazy! now we'll see inflation go through the roof with gas prices like, remember when $3.51 was already "too high" ? what's next, will they make us pay for air too ?!

I'm worried about this... Oil prices are already super high and this cut is gonna make things worse. I get that they're trying to stabilize the market but we'll see how that plays out. The US isn't immune to global events, you know? We've been lucky so far with our reserves and production increase but it's not like we can just ignore the rest of the world when it comes to oil. This is a domino effect thing... if oil prices go up in Europe or elsewhere, it'll trickle down here too. It's gonna be tough for folks who are already feeling the pinch from inflation.

omg i just got back from a road trip with my bf and we had to stop like every hour for gas because our car was literally on fumes rn lol anyway this news about OPEC+ slashing oil output is super concerning im not sure how people are gonna afford their summer road trips now i mean $3.80 to $3.90 per gallon sounds crazy expensive even if they are getting the discounts at gas stations like we did my friend's cousin who lives in florida said that gas prices were already pretty high there and now this news is gonna make it even worse poor guy