New York (CNN) The surprise move by OPEC and its allies to cut oil production will soon be felt at gas pumps in the US.
The group known as OPEC+ announced on Sunday that it will cut oil production by more than 1.6 million barrels a day starting in May, which will run until the end of the year. The news sent both Brent crude futures, the global oil benchmark, and WTI, the US benchmark, up about 6% in trading Monday.
The production cut announcement will have an immediate impact on gasoline futures, which will be passed on to US drivers more quickly than oil price increases. RBOB, the closely watched wholesale price of gasoline, rose about 8 cents a gallon, or about 3%, in morning trading.
“I think OPEC is reawakening the inflation monster,” said Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA. “The White House should be shocked and a lot of people angry. This will certainly change 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 sees it rising to $3.80 to $3.90 in the relatively short term thanks to OPEC’s move.
“We’re not going to go back to $5 a gallon. I don’t think we’re going to go up to $4 yet,” he said. But he said that by the end of the summer US drivers may return to above the prices earlier in the year, especially if there is a hurricane or other storms that affect production on the Gulf coast.
The average regular gas price in the US a year ago stood at $4.19 per gallon after Russia’s invasion of Ukraine and the disruption it caused to world energy markets. Prices eventually reached a record $5.02 a gallon on June 14, before beginning a slow but steady decline over more than three months in which the average price fell every day. The decline is partly due to the release of oil from the US Strategic Petroleum Reserve, and partly to concerns that a US or global recession will reduce demand for fuel.
Even at $3.51, US gas prices are still below the $3.53 average on February 23, 2022, the day before Russia’s invasion of Ukraine.
Kloza said that one thing that is keeping prices from getting anywhere near record levels in 2022 is that the US is planning more releases from the SPR, and US oil production and refining capacity both high. But the cut of 1 million barrels a day of oil by OPEC+ will not be easily reversed.
“They have the ability to cut production and they seem motivated to do it,” he said.
