Oil cartel OPEC+ has dealt a significant blow to the global economy, announcing a surprise reduction in oil production that is likely to send US gas prices soaring. The move, which will see an additional 1.6 million barrels of oil cut daily from May to the end of the year, sent shockwaves through financial markets, causing Brent crude futures and WTI to jump up by over 6%. Gasoline futures also saw a significant spike, with RBOB prices rising by about 8 cents per gallon.
The impact on US drivers is expected to be felt quickly, as gasoline prices are more directly tied to wholesale market trends than oil prices. According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, OPEC's move "is reawakening the inflation monster" and will likely push national average US gas prices up to $3.80 or higher.
While some analysts have predicted that gas prices could reach as high as $4 per gallon, Kloza is more cautious, saying that $5 a gallon remains out of reach. However, he does expect prices to remain elevated for the remainder of the summer, particularly if there are disruptions in oil production along the Gulf Coast, which could be exacerbated by hurricanes.
It's worth noting that gas prices have already fallen significantly since their peak at $5.02 per gallon in June 2022, largely due to the release of oil from the US Strategic Petroleum Reserve and concerns about a potential recession. However, Kloza points out that even without the recent releases, US gas prices remain relatively low compared to pre-pandemic levels.
The key factor driving these price increases, according to Kloza, is OPEC's ability to cut production and their apparent motivation to do so. While it's unclear what drove this decision, one thing is clear: OPEC's move will have significant implications for the global economy, and US drivers can expect to feel the impact at the pump in the coming weeks and months.
The impact on US drivers is expected to be felt quickly, as gasoline prices are more directly tied to wholesale market trends than oil prices. According to Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, OPEC's move "is reawakening the inflation monster" and will likely push national average US gas prices up to $3.80 or higher.
While some analysts have predicted that gas prices could reach as high as $4 per gallon, Kloza is more cautious, saying that $5 a gallon remains out of reach. However, he does expect prices to remain elevated for the remainder of the summer, particularly if there are disruptions in oil production along the Gulf Coast, which could be exacerbated by hurricanes.
It's worth noting that gas prices have already fallen significantly since their peak at $5.02 per gallon in June 2022, largely due to the release of oil from the US Strategic Petroleum Reserve and concerns about a potential recession. However, Kloza points out that even without the recent releases, US gas prices remain relatively low compared to pre-pandemic levels.
The key factor driving these price increases, according to Kloza, is OPEC's ability to cut production and their apparent motivation to do so. While it's unclear what drove this decision, one thing is clear: OPEC's move will have significant implications for the global economy, and US drivers can expect to feel the impact at the pump in the coming weeks and months.
The oil cartel just decided to cut production by 1.6 million barrels? That's crazy! I was expecting prices to drop now that the pandemic is over but this news is like, whoa! 
I can already imagine the long lines at gas stations and the cash-strapped drivers out here. This is gonna hit low-income families especially hard...like $3.80 a gallon? That's steep.
Just when you thought gas prices couldn't get worse, OPEC decides to kick it up a notch! 
$3.80 a gallon? Yikes, that's just crazy talk... 
. And what really worries me is that some of these disruptions could happen during hurricane season, which would make things even worse 
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. And now with OPEC cutting production and all that drama, I'm worried about the economy 
. What was I saying... oh yeah, gas prices. It's like they're going to reawaken this inflation monster 
. Can't say I'm happy about it either 
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. They're reducing production by 1.6 million barrels? That's like taking a huge chunk outta our gas tanks. I mean, I know some analysts are saying prices won't reach $5 a gallon but still, $3.80 is pretty steep for me 
at least the prices have been low compared 2 pre-pandemic levels tho 
so fingers crossed 4 a calm summer 
its gonna be a total disaster for us americans, gas prices are gonna go thru the roof 
anyway, im so down to stock up on gas money, whoever invented credit cards is a genius 
. I mean, who doesn't love shell shock on their next road trip? The fact that OPEC is making us pay more for oil by cutting production is like, totally not a surprise at this point 
. It's not like we didn't see this coming or anything. And yeah, because the $5 gallon mark was never a pipe dream anyway 
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. Still, can't we just have a stable global economy for once? 
that's crazy talk! i mean, i'm all for sustainable energy and reducing our carbon footprint but opec's move is just a short-term fix to help them boost profits 
anyway, gotta keep an eye on this one... it's gonna get interesting! #OPECplus #GasPriceSurge #SustainabilityVsProfit
. I mean, sure, they're just trying to make a buck, but do we really need more price hikes? 
Anyway, I think it's wild how quickly prices are going to jump up 
. On the bright side, at least our US gas prices are relatively low compared to pre-pandemic levels... that's something, right? 
, folks.