Oil prices jumped more than $3 a barrel on Monday as OPEC+ confirmed that it is considering reducing output by more than one million barrels per day to address ongoing oil market weakness, the Wall Street Journal reported.
According to CNBC, “a significant production cut is poised to anger the United States, which has been putting pressure on Saudi Arabia to continue pumping more to help oil prices soften further and reduce revenues for Russia as the West seeks to punish Moscow for sending troops to Ukraine.”
If OPEC+ does go ahead with the plan, it would be the largest slash to production since 2020, when OPEC+ reduced output by a record ten million barrels per day in response to plummeting demand due to the Covid-19 pandemic.
Last month, Treasury Secretary Janet Yellen warned that gas prices could potentially rise again in the winter as some European countries move to further limit Russian profits from oil sales.
“This winter, the European Union will cease, for the most part, buying Russian oil,” she said during an interview on CNN’s State of the Union.
“And, in addition, they will ban the provision of services that enable Russia to ship oil by tanker. And it is possible that that could cause a spike in oil prices,” she continued.
Meanwhile, per the latest AAA data, the national average price for a gallon of gas trekked higher by seven cents over the past week to hit $3.79.
“The regional differences in gas prices are stark at the moment, with prices on the West Coast hitting $6 a gallon and higher, while Texas and Gulf Coast states have prices dipping below $3 in some areas.” Andrew Gross, AAA spokesperson, said in a release.
“At least six California refineries are undergoing maintenance, and there is limited pipeline supply to the West Coast from locations east of the Rockies,” he continued.
According to data from the Energy Information Administration (EIA), gas demand increased from 8.32 million barrels per day to 8.83 million barrels per day last week, while total domestic gasoline stocks retreated by 2.4 million barrels per day to 212.2 million barrels per day.
“If demand remains robust as supply tightens, drivers should brace for rising pump prices through the weekend,” AAA concluded.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.