Oil prices are soaring as production cuts by Saudi Arabia and Russia continue to impact global markets, leading to higher gas prices for consumers. The international benchmark Brent crude has reached a 10-month high of $94.34 per barrel. As a result, the average price of regular gas has increased nearly 20 cents from a year ago, now standing at $3.88 per gallon.
Certain states in the US are experiencing even higher gas prices. California, for example, has an average price of $5.58 per gallon, which is $1.70 higher than the national average. Other states with elevated prices include Washington ($5.05), Nevada ($4.92), Hawaii ($4.80), and Oregon ($4.70). However, some states have lower prices, such as Georgia ($3.39), Louisiana ($3.40), Alabama ($3.43), and South Carolina ($3.43).
Typically, gas prices decrease during the fall season, but concerns have arisen that prices may remain high due to the extension of oil production cuts. The Organization of the Petroleum Countries (OPEC), led by Saudi Arabia and Russia, along with other partners known as OPEC+, decided to limit production in response to falling global prices. This decision to cut a million barrels per day was made in July and has been extended through August and September. Saudi Arabia has even announced that production cuts will continue for the rest of the year.
Despite these production cuts, the United States has been leading global production from non-OPEC+ nations this year. The International Energy Agency (IEA) predicted a surge in overall oil demand, largely driven by summer air travel and increasing demand from China.
Saudi Arabia’s energy minister, Prince Albulaziz bin Salman, defended the production cuts, asserting that international energy markets require regulation to control volatility. He also highlighted the uncertainty surrounding Chinese demand but stated that the situation is not yet severe.
In summary, oil prices approaching $95 per barrel and ongoing production cuts by Saudi Arabia and Russia are causing gas prices to remain high. This comes as a disappointment to drivers who typically expect relief at the pump during the fall season. However, the extension of production cuts raises concerns that prices may not decrease as expected.
Sources:
– Reuters: Reporting on Saudi Arabia’s energy minister defending production cuts
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