What the OPEC+ oil production cut means for gas prices
National average for gallon of regular gasoline dropped 14 cents over past week, AAA reported
OPEC+ in a 'quandary' over oil output: Andy Lipow
Lipow Oil Associates president Andy Lipow forecasts OPEC+ to leave their oil production quota 'unchanged' at their December 4th meeting on 'The Claman Countdown.'
According to an industry analyst, the OPEC+ meeting on Sunday could impact the recent plunge in domestic gas prices.
According to AAA, the Saudi-led OPEC oil cartel and allied producers, including Russia, decided to maintain output cuts of two million barrels per day to boost the global price of oil.
Recently, the price of oil has dropped on fears that coronavirus outbreaks and the strict zero-COVID restrictions in China would reduce fuel demand in a significant economy. On top of that, recession fears in the U.S. and Europe raise the prospect of lower demand for gasoline and other fuel made from crude.
"Gas prices are dropping sharply and are only a nickel more per gallon than a year ago," AAA spokesperson Andrew Gross said. But, because oil is the main ingredient in gasoline, "OPEC+’s move could slow this decline," although prices will likely still be lower than they were a year ago, Gross added.
A gas pump at a Sheetz convenience store in Pennsylvania. (Paul Weaver/SOPA Images/LightRocket via Getty Images / Getty Images)
On Monday, AAA reported that the national average for a gallon of gasoline fell 14 cents to $3.40 over the past week. That's down from an average of $3.79 a month ago and from a record high of $5 from earlier this summer, according to AAA data.
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The Sunday meeting with 23 oil-producing nations came just one day before planned sanctions aimed at hitting Russia's oil earnings in retaliation of its invasion of Ukraine took effect, potentially tightening supply and driving up prices.
This includes a European Union boycott of most Russian oil and a price cap of $60 per barrel on Russian exports imposed by the EU and the Group of Seven democracies.
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It is unclear how much Russian oil the two sanctions measures could take off the global market.
The White House, which has been pushing for more oil supply, called the OPEC+ decision to cut production quotas, announced in October, "shortsighted."
"At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices," national security adviser Jake Sullivan and NEC Director Brian Deese said in a joint statement.
The Associated Press contributed to this report.