Oil prices are closing in on $95 a barrel as production cuts in Saudi Arabia and Russia continue to impact global markets, keeping gas prices near summer highs at one point where drivers generally expect relief at the pump.
The price of international benchmark Brent crude hit $94.34 a barrel on Monday afternoon, marking a 10-month high.
The impact on gas prices saw the average price of regular gasoline hit $3.88 on Monday, an increase of almost 20 cents from last year.
Gas prices in California are about $1.70 higher than the national average, coming in at $5.58, while Mississippi has the lowest prices at $3.30, according to data from the ‘AAA.
Other states with higher prices include Washington at $5.05, Nevada at $4.92, Hawaii at $4.80 and Oregon at $4.70. On the other side of the scale, other states on the lower end of the spectrum include Georgia at $3.39, Louisiana at $3.40, Alabama at $3.43 and Carolina South at $3.43.
Gasoline remains well below the record highs of June 2022, when the national average reached $5.01 per gallon. Fall is typically a time when gas prices decline compared to summer, but the recent extension of oil production cuts has raised concerns that prices will remain the same.
U.S. crude oil prices began rising earlier this summer after the Organization of the Petroleum Exporting Countries (OPEC) – led by Saudi Arabia and Russia – and its partners, called OPEC+, decided to limit the production in a context of falling world prices.
The reduction of one million barrels per day was announced in July, then extended until August and September. Earlier this month, Saudi Arabia announced it would extend its oil production cuts for the rest of the year.
In August, the International Energy Agency (IEA) predicted an increase in overall oil demand, driven by both summer air travel and continued growth in demand from China. Even with supply declines due to OPEC+ cuts, the United States led all countries in non-OPEC+ production this year, according to the IEA.
Saudi Energy Minister Prince Abdulaziz bin Salman defended the production cuts on Monday, saying international energy markets need regulation to limit volatility, according to a Reuters report. He also reportedly warned of uncertainty over Chinese demand, but said the situation “is not bad yet,” according to Reuters.
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