Gas prices are expected to drop further this summer as OPEC+ increases oil production, leading to a notable decline in global oil prices during peak US travel season. Saudi Arabia, the group’s main player, is prioritizing market share over higher prices, especially as US shale production grows and Chinese demand remains weak.
Recently, eight major oil producers, including Saudi Arabia and Russia, announced plans to boost output by 548,000 barrels per day in August—well above analysts’ expectations. This announcement caused oil benchmarks to fall, with US crude and international Brent both down in early trading.
With Americans traveling more and energy use rising, the timing of this price drop is significant. US gas prices have already fallen 11% compared to last year, averaging $3.16 per gallon. Since about half the cost of gas comes from crude oil, even small changes in oil prices can impact consumers at the pump.
OPEC+ attributes its decision to positive economic signals and low oil inventories, but many analysts believe it’s a strategic move to regain lost ground in the market. Saudi Arabia appears willing to accept lower oil prices as a trade-off to maintain its influence and respond to international calls for cheaper energy, despite needing higher prices to balance its budget.
Experts predict oil prices may remain subdued for some time, especially if OPEC+ continues raising output. Some forecasts suggest that prices could drop further if production increases again in September, potentially leading to an oversupplied market.