Oil prices are surging after Saudi Arabia said it would extend its production cuts through the end of September, and North Texans are bracing for a rise in gas prices as a result.
The Saudi announcement of a production cut of 1 million barrels of oil a day began in July. Meanwhile, the other OPEC+ countries have said they will extend their production cuts through 2024.
The price of gas at the pump is dependent on several factors, but chief among them is the cost of crude oil, AAA Texas spokesman Daniel Armbruster told The Dallas Morning News.
“Crude oil prices continue to climb as Saudi Arabia and other OPEC+ members continue with further production cuts. When it comes to the price of retail gasoline there are several factors, but the cost of crude oil is the primary driver. Pump price fluctuations remain possible as demand for fuel is strong.”
According to AAA Texas, the cost for a gallon of regular unleaded gas in Dallas County is currently about $3.52, about 5 cents higher than the state average of $3.47. The state average has gone up about 32 cents in the last month.
The national average is $3.82, which reflects a 30-cent increase over a month ago, per AAA.
Globally, the price of oil is up to $83 per barrel after six weeks straight of increases, the highest it has been since November 2022, per ZeroHedge. The upward trend does not bode well for the Federal Reserve’s goal of controlling inflation, according to ZeroHedge.
Reuters reported that the rising price of oil could prompt central banks around the globe to increase interest rates to put downward pressure on oil prices.
The Saudis hope to boost prices enough to fund diversification and new jobs for their economy while also funding some multi-billion dollar infrastructure projects, per the DMN.
Russia also wants higher prices as the country is currently subject to a punitive price cap imposed by Western governments to starve it of much-needed revenue to continue its war in Ukraine, according to the DMN. Estimates indicate that Russia’s export revenue is down 36% from a year ago, per the International Energy Agency, as reported by the DMN.
