New York
CNN
–
Opec and its allies’ surprise at this move to slash oil production will soon be felt at US Gas Pumps.
The group known as Opec+ announced on Sunday it will cut oil production by more than 1.6 million barrels a day starting in May, running through the end of the year. The news sent both Brent crude futures, the global oil benchmark, and WTI, the US Theschmark, down about 6% in Monday’s trading.
The production cut announcement will also have an immediate impact on fuel futures, which will be passed on to drivers more quickly than the spike in oil prices. Rbob, the most closely watched gasoline wholesaler, was up about 8 cents a gallon, or about 3%, in morning trading.
“I think OPEC has changed the dragon of inflation,” said Tom Kloza, global head of energy analysis for the offices, which tracks gas prices, which tracks gas prices, which tracks gas prices, which tracks gas prices, which tracks gasoline prices for AAA. “The White House must have been shocked and pissed off for the first time. It certainly changed the calculus for a while.”
The National Average for gas prices in the US stood at $3.51, on Monday, according to AAA. Kloza said he could see up to $3.80 to $3.90 in the relatively short order thanks to Opec’s move.
“We’re not going back to $5 a gallon. I don’t think we’re going to get as good as $4,” he said. But he said at the end of the summer drivers that the summer drivers could return to the prices of the first year, especially if there is a hurricane or other storms that affect production along the Gulf Coast.
The average price of US regular gas a year ago stood at $ 4.19 a gallon in the invasion of Russia and the destruction of the world energy markets. Prices later reached a record $5.02 a gallon on June 14, before beginning a slow but steady decline over three months in which the average price fell every day. The decline was driven in part by the release of oil from the strategic petroleum reserve, and in part by concerns that there is a recession in the US that reduces the demand for fuel.
Even at $3.51, US gas prices averaged just $3.53 on February 23, 2022, the day before Russia invaded Ukraine.
Kloza said that one thing that keeps prices from going to record levels in 2022 is that the US Plase of additional releases from the SPR, and the production of oil in the US and the refining capacity of the US. But a cut of 1 million barrels a day of oil in Opec + is not easy to do.
“They have the ability to cut production and they seem motivated to do so,” he said.