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Recent news from OPEC and its allies is likely to have an impact on US gas prices. OPEC+ announced a surprise decision to cut oil production by over 1.6 million barrels a day, starting in May and lasting until the end of the year. This move has caused a significant increase in both global and US oil prices, with Brent crude futures and WTI rising approximately 6% in trading.
The effect of this production cut will be felt by US drivers sooner rather than later, as gasoline futures are expected to increase. The most closely watched wholesale gasoline price, RBOB, has already risen by about 8 cents a gallon, or 3%, in morning trading.
Tom Kloza, global head of energy analysis for OPIS, suggests that this move by OPEC may trigger inflation and alter the fuel price landscape. He believes that US gas prices could potentially reach $3.80 to $3.90 in the near future, which could surpass year-earlier prices. While he doesn’t anticipate prices reaching $5 a gallon, factors such as hurricanes or storms affecting production along the Gulf Coast could contribute to higher prices.
It’s important to note that the current national average for US gas prices stands at $3.51, according to AAA. This is already close to the average price before Russia’s invasion of Ukraine in 2022. However, Kloza assures that prices won’t reach the record levels of $5.02 a gallon seen during that time. This is due to additional oil releases from the US Strategic Petroleum Reserve and the increased production and refining capacity in the US. Nevertheless, the 1 million barrel a day oil cut by OPEC+ will be challenging to compensate for.
As an established financial services company, we understand the potential impact of rising gas prices on businesses. That’s why we’re committed to providing fast and easy merchant cash advance solutions to help you navigate any financial challenges that may arise. With no credit requirements, our business cash advance is accessible to all, ensuring you can continue operating without setbacks. Contact us today to learn more about our MCA services and how we can support your business.