Saudi Arabia recently extended its voluntary crude oil production cuts through the end of the year. Coupled with U.S. production levels still below their 2019 high, independent truckers, fleets, and freight carriers can anticipate diesel prices to climb even higher.
“With many parts of the global economy now on a wobbly footing, the OPEC+ alliance has returned to a strategy of aggressive supply restraint to support slumping oil prices, with several members announcing 1.2 million b/d in collective cuts from May through the end of the year and Saudi Arabia unilaterally declaring an extra 1 million b/d cut,” according to S&P Global Commodity Insights.
The U.S. achieved energy independence in 2019 when crude oil production hit a record high of more than 402 million barrels in December. Production dropped due to a lack of demand during the pandemic. But since the health crisis waned, American oil has experienced helter-skelter output. In February 2021, production dropped to 277 million barrels, rising to 385 million in June 2023.
Although the mainstream media has engaged in its share of finger-pointing as inflation spiked along with prices at the pump, truckers now have a foreign adversary to contend with. The OPEC cartel, which includes Russia and Saudi Arabia, plans to tamp down production to keep pushing prices higher.
“OPEC’s 13 members have pumped an average of 27.4 million barrels a day so far this quarter, or roughly 1.8 million less than it believes consumers needed, according to the report. If the organization keeps output unchanged, as group leader Saudi Arabia has signaled it plans to do, the gap between supply and demand will almost double in the final three months of the year. OPEC estimates it needs to provide 30.7 million barrels a day in the fourth quarter to satisfy consumption,” Bloomberg News reports.
For its part, Russia announced it would reduce output by upwards of 500,000 barrels per day. The subject of war sanctions, the Eastern power has maintained relatively consistent production levels over the last year. The biggest loser in the global oil flap appears to be truckers and everyday consumers. Diesel prices at the pump have risen more than 70 cents per gallon in recent months. Given the projections of foreign oil production and U.S. fields not making up the difference, the average per-gallon price could nip the $5 mark it surpassed in 2022.
https://www.statista.com/statistics/265181/us-oil-production-in-barrels-per-day-since-1998/
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=M
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emd_epd2d_pte_nus_dpg&f=m
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