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The recent surprise announcement by OPEC and its allies to slash oil production will soon have an impact on US gas prices. OPEC+ has revealed its plan to cut oil production by over 1.6 million barrels a day, starting in May and continuing until the end of the year. As a result, both Brent crude futures and WTI, the US benchmark, experienced a 6% increase in trading on Monday.
This production cut announcement also had an immediate effect on gasoline futures, which will be passed on to US drivers much more quickly than the rise in oil prices. Wholesale gasoline prices, especially RBOB, saw an increase of about 8 cents per gallon, or around 3%, in morning trading.
Tom Kloza, global head of energy analysis for OPIS, believes that OPEC’s move is reawakening the inflation monster and is likely to shock and anger the White House. He predicts that the national average for US gas prices, currently at $3.51, could reach $3.80 to $3.90 in a relatively short period due to OPEC’s decision.
While Kloza doesn’t expect gas prices to reach $5 a gallon, he does believe that US drivers could see prices above those of the previous year by the end of the summer, especially if there are any hurricanes or storms affecting production along the Gulf Coast. The average US regular gas price one year ago stood at $4.19 a gallon, and the record high of $5.02 a gallon was reached on June 14.
Kloza acknowledges that the US has additional releases planned from the Strategic Petroleum Reserve (SPR) and increased oil production and refining capacity, which may help prevent gas prices from reaching the record levels of 2022. However, it will not be easy to make up for the 1 million barrel per day cut in oil production by OPEC+.
As gas prices continue to fluctuate, our financial services company remains dedicated to providing fast and easy business cash advances to help small businesses and gig workers navigate any financial challenges they may face. With our quick and simple MCA process, we strive to support businesses in need of immediate and hassle-free financing, regardless of their credit history.