The price of gas may be spiking at a bad time for Joe Biden.
To prop up the price of crude, which two previous cutbacks agreed upon by key producing countries in the OPEC+ alliance failed to do, Saudi Arabia said earlier this week that it would further lower its oil output.
Experts predict that the cuts, which will amount to 1 million barrels per day beginning in July, will send shockwaves across the worldwide market, including the United States, but the effects may not be noticed for another six to eight months. This suggests that if there is a spike in petrol prices in the United States, it will occur during President Joe Biden’s re-election campaign.
AAA reports that as of June 6th, the national average price of regular gasoline at the pump is $3.553 a gallon, which is $1.36 less than the same time last year.
According to Denton Cinquegrana, chief oil analyst at Oil Price Information Service, there won’t be much of an immediate effect on gas prices in the United States.
Cinquegrana remarked that it appears as though Saudi Arabia is doing a one-month test run of the unilateral reduction in July. A lot of oil is used for heating and cooling homes in Saudi Arabia during that time of year. The market’s immediate reaction was positive, but it has since slowed.
Russian Deputy Prime Minister Alexander Novak reportedly agreed to keep Russia’s voluntary cut of 500,000 barrels per day into next year as part of the OPEC+ accord. This was reported by the Russian state news outlet Tass.
Patrick De Haan, head of petroleum analysis at GasBuddy, said a significant rise in gas prices due to the latest cuts in production shouldn’t be expected.
Price increases of a few cents here and there are the only immediate effect of the reductions. De Haan predicted that the reduction would take some time to result in even reduced oil stocks.
He said that low oil stocks could escalate oil prices in the future when U.S. and global oil demand rises in line with a potential economic recovery. It may take six months to a year or perhaps more.
Cinquegrana noted that in the long run, experts are also monitoring the output from Russia and the risk of an internal OPEC dispute.
