Oil costs have surged 8% — what does this mean for Canadian gas prices?

Apr 3 2023, 9:48 pm

Crude oil prices have risen by as much as 8%, and it could mean higher gas prices for Canadians — again.

The surge in oil prices comes as a response to news that Saudi Arabia and other OPEC+ members will cut oil production by 1.16 million barrels per day from May.

The Organization of the Petroleum Exporting Countries (OPEC+) is a group of 23 countries that currently produce around 30% of the world’s crude oil.

A statement from the White House says that the “president is disappointed by the shortsighted decision by OPEC+ to cut production quotas.”

These quota cuts come in addition to the October 2022 announcement to cut production by two million barrels a day.

In January, the Bank of Canada increased the interest rate to 4.5% in an effort to curb inflation. Canadians, already facing 5.2% inflation, are being warned that increased oil prices could make reducing inflation more difficult.  

The rising price of oil is also likely to increase gas prices everywhere, including in Canada, where many are struggling to put meals on the table and are already upset at the idea of gas prices possibly rising higher.

The announcement has come as a surprise, as Saudi Arabia had previously stated that current quotas would remain in place until the end of the year.

It must be noted that many OPEC+ members aren’t currently able to meet their production quotas, so these cuts will not necessarily translate to the equivalent reduction in production.

Harry LinleyHarry Linley

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