OPEC agrees to keep oil production cut, likely maintaining high prices through November election
How have U.S. motorists been affected by recent fluctuations in oil prices?
U.S. motorists have been affected by recent fluctuations in oil prices, as the national average gasoline price has experienced changes. According to the latest data from GasBuddy and AAA, the average price for a gallon of gas stood at about $3.53 as of the past Saturday. This recent hike in prices is due to various factors, including the ongoing war in Gaza and attacks on shipping vessels in the Red Sea. Additionally, higher interest rates, concerns about demand due to slower than desired economic growth in Europe and China, and rising non-OPEC supply including from U.S. shale producers have contributed to the fluctuations in oil prices.
Despite these fluctuations, U.S. motorists have benefited from weaker oil prices which have stagnated in recent weeks, averaging $3.56 per gallon last week. That’s just a penny less than a year ago and down from a record national average high of $5 per gallon in June 2022. Analysts say the cuts could push oil prices higher in coming months, and they will be heavily watched going into the November election. The summer usually sees a spike in demand through the July-September quarter, but uncertainty about demand grows after that.
What specific reasons did OPEC+ cite for extending their output cuts through next year?
OPEC+ cited the need to boost slack prices as the primary reason for extending their output cuts through next year. The decision came after a meeting on Sunday, where the alliance observed that oil prices had not reached the desired levels despite the ongoing war in Gaza and attacks on shipping vessels in the Red Sea. The international benchmark Brent has been lingering in the $81-$83 per barrel range for the past month, falling short of the $100 per barrel levels not seen since late 2022. Factors such as higher interest rates, concerns about demand due to slower economic growth in Europe and China, and rising non-OPEC supply including from U.S. shale producers have contributed to the subdued prices. By extending the output cuts, OPEC+ aims to stabilize and potentially increase oil prices.
How do the extended output cuts by OPEC+ aim to influence oil prices during the upcoming November presidential election?
The extended output cuts by OPEC+ aim to maintain high oil prices during the upcoming November presidential election. By limiting production, the alliance seeks to boost slack prices that have not risen despite ongoing geopolitical tensions and the summer travel season. The move is also aimed at supporting the economies of Saudi Arabia and Russia, both of which rely heavily on oil revenues.