Oil closes in on $95 per barrel, keeping gas prices near summer highs

Oil prices are closing in on $95 per barrel as production cuts from Saudi Arabia and Russia continue to impact global markets, keeping gas prices near summer highs at a time when drivers typically expect to see relief at the pump. 

The price of international benchmark Brent crude rose to $94.34 per barrel as of Monday afternoon, which marked a 10-month high.

The knock-on impact on gas prices saw the average price for regular gas hit $3.88 as of Monday, an increase of nearly 20 cents from a year ago.

Gas prices in California are around $1.70 higher than the national average, sitting at $5.58 while Mississippi has the lowest prices at $3.30, according to AAA data.

Other states with higher prices include Washington at $5.05, Nevada at $4.92, Hawaii at $4.80, and Oregon at $4.70. On the other side of the scale, other states on the lower end of the spectrum include Georgia at $3.39, Louisiana at $3.40, Alabama at $3.43, and South Carolina at $3.43. 

Gas remains well below the record highs of June 2022, when the national average hit $5.01 per gallon. The fall season is typically a time when gas prices drop from the summer, but the recent extension of oil production cuts has sparked concerns prices may remain the same.

U.S. crude oil prices began rising earlier in the summer after the Organization of the Petroleum Exporting Countries (OPEC) — led by Saudi Arabia and Russia — and its partners, named OPEC+, decided to limit production amid falling global prices.

The cut of a million barrels per day was announced in July and later extended into August and September. Earlier this month, Saudi Arabia announced it would extend its oil production cuts for the rest of the year.

In August, the International Energy Agency (IEA) predicted a surge in overall oil demand, prompted by both summer air travel and continual demand growth from China. Even with the drops in supply due to OPEC+ cuts, the U.S. has led all nations in production from outside OPEC+ this year, according to the IEA. 

Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, on Monday defended production cuts, arguing international energy markets need regulation to limit volatility, according to reporting from Reuters. He also reportedly warned about uncertainty about Chinese demand but said the situation “is not bad yet,” according to Reuters.