The Organization of the Petroleum Exporting Countries (OPEC) raised oil prices worldwide after cutting its production by more than a million barrels daily.
Global benchmark Brent crude oil costs rose to $81.78 per barrel, increasing by nearly 6% since March 31, 2023.
OPEC+ represents the organization’s alliance with 10 countries: Russia, Kazakhstan, Azerbaijan, Mexico, Oman, Malaysia, Sudan, Bahrain, Brunei, and South Sudan.
OPEC was established in January 1961 by five countries: Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela. More than 10 countries and sovereign states joined afterward: Qatar, Indonesia, Libya, Algeria, Nigeria, Ecuador, Angola, Equatorial Guinea, the Republic of Congo, the United Arab Emirates, and Gabon.
The OPEC+ group of countries announced in a meeting that it would cut oil production by more than 1 million barrels a day, beginning the project in May 2023 until the end of the year.
Following the announcement, Russia said it will reduce production to 500,000 oil barrels a day until the end of 2023, setting the total oil production from most OPEC+ nations and Russia at approximately 1.6 million barrels per day.
Saudi Arabia, Russia and their oil-producing allies announced on Sunday that they would cut production by nearly 1.2 million barrels of crude a day, or more than 1% of world supplies, in an apparent effort to increase prices. https://t.co/WTQgxOwz15
— The New York Times (@nytimes) April 2, 2023
Iraq said it would reduce production by more than 200,000 oil barrels a day, while the United Arab Emirates will cut it by 144,000 barrels and Kuwait by 128,000 barrels.
OPEC’s average price per oil barrel has increased and decreased over the last decade, reaching its highest price in 2012 and 2022.
In 2012, the average price of an oil barrel was $109. In 2016 prices were reduced to $40 a barrel, slightly increasing to $52 in 2017.
From 2017-2020, crude oil prices remained low. Beginning in 2021, however, prices skyrocketed to nearly $70 a barrel, increasing to $100 in 2022 and decreasing to $82 in 2023.
As oil prices increase, so do gas prices. Under the Biden administration, gasoline prices rose to their highest levels in history.
The American Automobile Association (AAA) reported that the average gasoline price in the U.S. is $3.46 per gallon, 12 cents lower than in 2022, today’s gas prices, adjusted for inflation, are higher now than they were during the beginning and ending of World War II.
Following its decision, OPEC will likely increase gas prices, according to Fox News.
Phil Flynn, an analyst at Price Futures Group, an organization that offers financial consulting services, said the cuts of more than a million barrels per day could result in higher gas prices, increasing by 25 cents.
“We will see some expanded refinery capacity in a few months, but if I were a motorist I’d prepare for the worst and hope for the best,” Flynn told FOX Business.