Organization of the Petroleum Exporting Countries (OPEC) ministers said on Wednesday that they would reduce oil production by 2 million barrels per day, a decision that is anticipated to increase oil prices globally.
The decision was made as a result of pressure from the White House on major oil producers like Saudi Arabia, which heads the global oil cartel, to avoid making significant cuts to oil output as long as gas prices remain high.
Even while the cuts are projected to have a negative effect on consumer spending, they are anticipated to help oil-producing countries like Russia, Kuwait, and the UAE recoup their oil prices.
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It follows a price decline from $120 per barrel three months ago to approximately $90 per barrel amid worries about a global economic slowdown, rising U.S. interest rates, and a stronger dollar, according to Reuters. The action is the greatest output decrease since the COVID-19 epidemic.
After the Biden administration attempted to reduce prices at the pump after they reached record highs earlier this year, it is anticipated that U.S. gasoline prices would increase once more.
As the November elections approach, the OPEC decision may also cause problems for the White House.
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According to AAA, gas station prices range from $3.06 per gallon in Mississippi to as much as $6.41 per gallon in California. The current national average for petrol prices is $3.80 per gallon.
According to AAA and GasBuddy, refinery maintenance, both planned and unexpected, and increased demand are to blame for the spike in gas prices on the West Coast.
The move to reduce oil production despite diplomatic efforts by the White House to improve ties with Saudi Arabia may be a symptom of deteriorating ties between Washington and Riyadh.