The impact of OPEC’s unexpected oil reduction on gas prices

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OPEC and its allies’ surprise move to slash oil production will soon be felt at US gas pumps. The group known as OPEC+ announced Sunday it would cut oil production by more than 1.6 million barrels a day starting in May, running through the end of the year. This news from OPEC+ had an immediate impact on gasoline futures, which will be passed onto US drivers much more quickly than the spike in oil prices. RBOB, the most closely watched wholesale gasoline price, was up 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 has to be shocked and major-time pissed. It certainly alters the calculus for a while.” The national average for US gas prices stood at $3.51 on Monday, according to AAA. Kloza said he could see it getting up to $3.80 to $3.90 in relatively short order thanks to the move by OPEC.

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