OPEC+ will extend supply cuts — but that doesn’t appear to be raising prices

OPEC+, the petroleum-producing cartel including Russia, met over the weekend and announced that it will extend some of its current voluntary supply cuts to try and keep global oil prices higher. With the price at or below $80 a barrel, some oil-exporting countries are hurting.  

But OPEC’s moves don’t appear to be raising prices on the world market or at the pump here in the U.S.

OPEC+ announced it’ll extend some voluntary production curbs into 2025 and could phase others out later this year. Andrew Gross at AAA calls it “typical OPEC mushiness.”

“Clearly the oil market took in OPEC+’s news and just sort-of shrugged, and the price of oil dropped a couple dollars a barrel,” he said.

One thing weakening the pricing power of OPEC+ is anemic oil demand, especially in China, according to Columbia Business School climate economist Gernot Wagner.

“China’s economy is not growing as fast as expected, while at the same time it is deploying electric vehicles faster,” he said.

Meanwhile, U.S. gas prices have fallen 13 cents in the past month, according to AAA, to average $3.53 a gallon nationwide.

Andrew Gross predicts more of the same: “Slow, unspectacular decline through probably early July.”

Gas prices do vary a lot, though. Californians (who tend to pay more for gas prices) are paying more than $5 a gallon. In Mississippi, it’s just over $3.