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How will OPEC+ oil cut impact US gas prices?

WASHINGTON (NewsNation) — Oil prices jumped Tuesday after OPEC+, an alliance with oil-producing countries led by Russia and Saudi Arabia, announced plans to cut oil production, causing market concerns about the impact of higher prices on the global economy.

The surprise production cuts total around 1.5 million barrels per day, a move that will start in May until the end of the year, as part of a precautionary stabilizing measure, according to OPEC.

Reuters reported Tuesday that Brent crude futures were up 42 cents, or 0.5%, to $85.35 a barrel. U.S. West Texas Intermediate (WTI) crude futures were trading at $80.85 a barrel, up 43 cents, or 0.5%.

The cuts have Americans once again watching prices at the pump, as the busy summer travel season looms. Average gas prices across the country were $3.50 per gallon, GasBuddy reports. It’s up 10 cents from last week.

The U.S. said it received a heads-up about the production cuts, but this announcement now brings concerns it could reverse some of the progress in fighting inflation.

Crude oil makes up about half the price for the cost of gas at the pump.

Clearview Energy Partners, a research group, said this OPEC+ decision could spike prices at the pump by around a quarter, and demand from the summer driving season could push prices to $4 per gallon in several months.

President Joe Biden tried to ease some of the concern while speaking to reporters on Monday.

Reporter: “Do you have any reaction to the oil production cuts, sir? OPEC?”

Biden: “It’s not going to be as bad as you think.”

The OPEC+ announcement came days after House Republicans passed an energy package to boost oil production and ease permitting restrictions from things like pipeline projects. But Senate Majority Leader Chuck Schumer has already called the package dead on arrival since it allegedly targeted clean energy initiatives.

Last month, U.S. Energy Secretary Jennifer Granholm added that it could take years for the country to replenish its stock in the Strategic Petroleum Reserves.

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