Oil cartel OPEC+ has taken a surprise step, slashing its oil production by over 1.6 million barrels per day starting May, which is expected to send US gas prices higher in the coming months.
The move was announced on Sunday and had an immediate impact on global energy markets, with Brent crude futures rising about 6% and WTI, the US benchmark, also increasing by around that same amount. Gasoline futures saw a sharper spike of about 8 cents per gallon, or 3%, in morning trading.
Industry analyst Tom Kloza, who tracks gas prices for AAA, believes OPEC's move will "reawaken the inflation monster." He thinks the White House is likely to be shocked by this development and that it will alter the economic calculus for a while. According to Kloza, US gas prices could reach $3.80 to $3.90 in relatively short order due to the reduced oil production.
Kloza also notes that despite a similar national average price of $3.51 on Monday, he does not expect US drivers to see $5 per gallon again. However, by the end of the summer, prices could rise above year-earlier levels if there are any significant disruptions in production along the Gulf Coast.
It's worth noting that prices were already relatively low last February when Russia invaded Ukraine, and gas prices then plummeted over three months as a result. Kloza attributes this decline to both releases from the US Strategic Petroleum Reserve and concerns about potential economic downturns. The fact that US oil production and refining capacity are now higher is also seen as an important factor in keeping prices from soaring.
However, with OPEC's move to cut production, it appears that these factors will not be enough to offset the impact of reduced supply on global energy markets.
The move was announced on Sunday and had an immediate impact on global energy markets, with Brent crude futures rising about 6% and WTI, the US benchmark, also increasing by around that same amount. Gasoline futures saw a sharper spike of about 8 cents per gallon, or 3%, in morning trading.
Industry analyst Tom Kloza, who tracks gas prices for AAA, believes OPEC's move will "reawaken the inflation monster." He thinks the White House is likely to be shocked by this development and that it will alter the economic calculus for a while. According to Kloza, US gas prices could reach $3.80 to $3.90 in relatively short order due to the reduced oil production.
Kloza also notes that despite a similar national average price of $3.51 on Monday, he does not expect US drivers to see $5 per gallon again. However, by the end of the summer, prices could rise above year-earlier levels if there are any significant disruptions in production along the Gulf Coast.
It's worth noting that prices were already relatively low last February when Russia invaded Ukraine, and gas prices then plummeted over three months as a result. Kloza attributes this decline to both releases from the US Strategic Petroleum Reserve and concerns about potential economic downturns. The fact that US oil production and refining capacity are now higher is also seen as an important factor in keeping prices from soaring.
However, with OPEC's move to cut production, it appears that these factors will not be enough to offset the impact of reduced supply on global energy markets.
. you know how when there's less of something in stock, prices tend to go up? same principle applies here. opec's move is like throwing a stone into a pond - ripple effects everywhere, and those ripples are gonna be felt for a while 
. it's interesting that some analyst thinks the white house might get shocked by this... because we all know how much politicians hate surprises 
. anyway, just remember: when you're living in a world where the rules can change on a dime, adaptability is key 
.
On one hand, you've got the obvious reason - to boost prices and reap some serious profits from higher demand. But on a deeper level, I think there are other factors at play here. 
. With oil prices dropping so sharply in February, many investors likely got caught up in the excitement, selling off their oil stocks and betting on even lower prices down the line.
. If global energy markets do indeed tip into a new inflationary phase, it could be bad news for consumers all over the world... especially here in the US 
.
. And what's worse, Kloza is saying it could get even worse by the end of the summer if production gets disrupted on the Gulf Coast 
. I mean, can't we just have stable prices for once? This inflation monster thing needs to be tamed ASAP 
.
! now us gas prices are probs gonna go up and it'll totally reawaken the inflation monster 
we'll just have to wait and see how it all plays out 
one thing's for sure tho, with russia invadin ukraine last feb, gas prices plummeted and now opec's like "nah" 
guess the good times are over 
and I'm over here thinking about how to reformat my spreadsheet with all these new gas price projections 
Kloza also mentions that despite national average prices being relatively low, prices could rise again by summer if production gets disrupted in the Gulf Coast 
. My friend's grandma has to deal with this every month and it's already super stressful for her.
? That could be a silver lining in all this chaos...
so it looks like the oil cartel has decided to take a big ol' swing at US gas prices... I mean, who needs $3.80/gallon or even $5/gallon when you can have an extra buck or two in your pocket, right? 
guess that's what happens when there are less barrels on the market 
it's like they're saying "hey, we know you need gas to live, but sorry not sorry"... and now everyone gets to reap the benefits of OPEC's surprise move 
. I'm not surprised to see Brent crude futures and WTI rising, given the historical relationship between supply and demand dynamics 
. The reduction in oil production will likely lead to higher gas prices, which could have a ripple effect on consumer inflation and economic activity. While it's difficult to predict exactly how US drivers will be affected, I think Kloza's $3.80-$3.90 per gallon price range is plausible.
. The rapid decline in gas prices last February was indeed influenced by a combination of factors, including releases from the Strategic Petroleum Reserve and concerns about economic downturns. However, with OPEC+ now reducing production, I think those mitigating factors may not be enough to offset the impact on global energy markets.
. I just hope there won't be any significant disruptions in production along the Gulf Coast, or things could get really ugly 
...
that's gonna send ush gas prices thru the roof! I mean, I know it's been low lately since russia invaded ukraine but still, $3.80 to $3.90 per gallon?! 
that's just crazy talk! I'm worried about summer, production on the gulf coast is gonna be key to seein' if prices stay in check or not 
. Anyone else think we're due for a price spike? 
what's an extra 30 cents per gallon when ppl are struggling to make ends meet? 
summer is coming and we'll see how well the economy can handle a little price bump 
oh my gosh, this is so interesting! I can see why people are getting worried about gas prices going up 
. 1.6 million barrels per day is no joke! 
, because let's be real, prices were already kinda low last February anyway 
. Fingers crossed the Gulf Coast doesn't get any major disruptions this summer though 
!
. btw, have you seen this graph of oil prices over the past few years? 