Good news for RVers: OPEC+ is turning the taps back on, pushing oil prices lower and offering some much-needed relief at the pump. As more crude enters the global market in June, road trippers could see slightly cheaper fill-ups—and maybe a little more freedom in their travel plans.
OPEC oil gusher in June repeats one applied in May
OPEC+, the group of major oil-producing countries led by Saudi Arabia and Russia, says it’s pumping up oil production in June. The conglomerate says this will spin out to about 411,000 more barrels per day. This follows a similar jump in May, a major strategy change.
Until recently, OPEC+ tried to keep oil prices high by limiting supply. Now, it’s the opposite: flood the market with oil. It seems rather counterintuitive. But OPEC+ is frustrated with some its own members—especially Kazakhstan and Iraq. The latter have been producing more than they agreed to. By letting prices drop, Saudi Arabia hopes to put financial pressure on these countries to play by the rules.
Price war in the offing?
It all could trigger a price war, say oil market pundits. It’s already making oil prices fall. That might sound like good news for drivers and businesses that rely on fuel, but it could hurt oil companies, especially U.S. shale producers, who need higher prices to stay profitable. It could also put the hurt on President Trump’s “Drill, baby drill!” admonishment. If prices are too low, there’s no inducement for domestic producers to invest in putting out oil for no good profit.
But OPEC+ may be playing a political angle. Saudi Arabia seems to be trying to cozy up to President Trump, who has pushed for lower fuel prices and is scheduled to visit the Middle East soon. Trump has also been pressuring OPEC to help lower gas prices.
At the same time, oil demand from China is slowing, and the U.S. has plenty of its own supply. That means the world could soon have more oil than it needs, which could keep prices down for a while.
How long will the OPEC oil gusher continue? The group will meet again on June 1 to decide if they’ll keep pumping up production in July.
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RVT1208b
Appears to me this would hurt Russia’s export income – which is helping to pay for their war on Ukraine……
It’s all political.
Thank you for the news, Russ and Tina! Interesting stuff. A “fun” game to play is to predict what OPEC will do ahead of the next meeting. I never cared much for “fun,” but did have colleagues who were paid to do just that. Anyway, thanks again, have a great weekend, and safe travels!