- Prepare for a "bump at the pump" as OPEC+'s shock crude cuts could send US gas prices above $4 a gallon, say analysts.
- The cartel's unexpected decision over the weekend could add over 50 cents a gallon to the US average, one energy analyst said.
US gasoline prices could climb toward $4 a gallon thanks to the surprise move by the Organization of Petroleum Exporting Countries and allies to slash their combined output by more than 1 million barrels per day, according to energy analysts.
The cuts could add more than 50 cents a gallon to average US gas costs, according to Kevin Book, managing director of ClearView Energy Partners. The national average currently stands at $3.50 a gallon, per AAA.
Moreover, there's "room to run on the upside, because second-half oil balances were already poised to tighten considerably," Book told Bloomberg.
Kpler's lead oil analyst Matt Smith echoed Book's view, saying that gas prices usually rally just ahead of the busy summer driving season, but this year, prices will get an extra boost due to the cartel's latest move. "This is going to provide a bump at the pump, essentially," Smith told Yahoo Finance.
OPEC+'s shock decision was reasoned as a a precautionary measure to ensure market stability, given crude benchmarks have declined since October on fears that a global recession could crimp demand.
On the news, crude prices jumped as much as 8%. Brent crude, the international benchmark, was trading up 0.64% at $85.43 a gallon on Tuesday. Meanwhile, West Texas Intermediate futures rose 0.77% to trade at $81.02 a barrel.
A surge in gas costs would be a blow for American drivers who have enjoyed a steady decline in prices since they hit a record above $5 a gallon last year, following Russia's invasion of Ukraine.
Higher oil and gas prices have also fanned fears about a rebound in US inflation, which still remains way above the Federal Reserve's 2% target.