
Saudi Arabia slashing oil supply, could drive up gas prices
The Saudi cut of 1 million barrels per day, to start in July, comes as the other OPEC+ producers agreed to extend earlier production cuts through next year.
The Saudi cut of 1 million barrels per day, to start in July, comes as the other OPEC+ producers agreed to extend earlier production cuts through next year.
Less oil flowing to refineries should mean higher gasoline prices for drivers and could boost the inflation hitting the United States and Europe.
The cuts total up to 1.15 million barrels per day from May until the end of the year, a move that could raise prices worldwide.
From the U.S. to Brazil and Indonesia, governments are embracing energy made from plants like soybeans or canola, or even animal fat, to move away from fossil fuels and cut emissions.
The supplemental rule comes as President Biden has accused oil companies of “war profiteering” and raised the possibility of imposing a windfall tax on energy companies if they don’t boost domestic production.
The production cut threatens a global economy already destabilized by the Ukraine conflict and risks saddling Biden and Democrats with newly rising gasoline prices just ahead of the U.S. midterm elections.
The refinery produces about 435,000 barrels per day and provides about 20% to 25% of the refined gasoline, jet fuel, and diesel used by Illinois, Indiana, Michigan, and Wisconsin.
While the Inflation Reduction Act concentrates on clean energy incentives that could drastically reduce overall U.S. emissions, it also buoys oil and gas interests by mandating leasing of vast areas of public lands and off the nation’s coasts.
The breakthrough spending deal reached by Sens. Joe Manchin and Chuck Schumer would commit a historic $370 billion to combat climate change, but it comes at a cost that some green activists are finding impossible to accept.
President Joe Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume.
A White House desperate to bring down gas prices is having little success persuading refinery owners to expand operations, and more closures are imminent.
The American Petroleum Institute, which represents the industry, said in a statement that capacity has been diminished as the Biden administration has sought to move away from fossil fuels as part of its climate change agenda.
Todd Borgmann, Calumet’s former CFO, was promoted to CEO effective this week. The move, and several other executive-level changes, were triggered by the May 1 retirement of board chairman Fred Fehsenfeld.
Obstacles to more U.S. oil are surmountable, according to analysts, yet will take months to work through and it could be late this year or early next before a significant production increase materializes.
A further round of talks between Russian and Ukrainian officials on Monday will focus on discussing a potential ceasefire with an immediate withdrawal of troops and security guarantees, Ukraine negotiator Mykhailo Podolyak said.
Economists say the one-two punch of rising prices and the intensifying geopolitical crisis could put the brakes on the rapid rebound and raise the risks of recession.
The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday, rising by 10 cents in one day, and up 55 cents since last week, according to auto club AAA.
Markets worldwide have swung wildly recently on worries about how high prices for oil, wheat and other commodities produced in the region will go because of Russia’s invasion, inflaming the world’s already high inflation.
The surge followed a warning from Russian President Vladimir Putin that Ukrainian statehood was imperiled as Russian forces battered strategic locations.
The leaders of OPEC and its oil-producing allies plan to gradually increase oil production while Russia’s invasion of Ukraine rattles markets, reshapes alliances, kills civilians and sends the price of crude skyrocketing.