Fuel prices are expected to continue rising as the Russian military advances in its attack against Ukraine this week.
Russia, a major oil and natural gas exporter, has raised fears that its invasion of Ukraine would disrupt the energy supply per USA Today.
According to AAA, the national average gas price in the United States jumped to $3.57 per gallon on Friday, up 3 cents from the previous day and up from $2.68 a year ago. US gas price hike prediction might hit $4 per gallon.
Oil prices dropped on Friday after exceeding $100 per barrel for a short period. The international standard Brent crude went down to $93.93 while US crude dropped to $91.43.
Oil Prices Could Shoot-Up Quickly
Tom Kloza, a chief international analyst of the Oil Price Information Service, said that there are concerns that the ongoing war between Russia and Ukraine could disrupt the supply of oil in the region would prompt an increase in gas prices.
Russia is the third-largest oil-producing company in the world, behind the United States and Saudi Arabia, according to the 2020 US Energy Information Administration.
DTN senior market analyst Troy Vincent predicted that crude oil price might go upward to $130 a barrel or perhaps more under the worst scenario, with Russian gas and oil entirely sanctioned and cut from the world market.
Rabobank commodity strategist Ryan Fitzmaurice pointed out that prices "could move very quickly," like what happened in the past. He cited that during the Libyan civil war in 2011, Brent jumped from $90 to over $125 in just four months, and US retail gasoline prices spiked to almost $4 per gallon from around $3 when the conflict erupted,
Meanwhile, the group of oil-producing nations OPEC+ will be conducting a meeting on March 2 to come up with a verdict regarding oil production levels according to Market Watch. For the past several months, OPEC+ failed to hit their production targets, which have raised fears about the levels of surplus oil production capacity. Concerns have also been expressed about the amount of spare oil production capacity available worldwide, which has reinforced crude oil buying support.
In July 2021, OPEC+ reached an agreement to implement an increase in monthly production by 400,000 barrels a day starting August 2021. It is intended to scrap the 5.8 million barrel in production cuts introduced in 2020.
Biden Will Alleviate "Pain" of Americans
United States President Joe Biden assured the public that the government is taking action and "using every tool" to ease any US gas price hike brought by the Russia Ukraine Crisis.
To counterbalance the US gas price hike, Biden is let out barrels from the Strategic Petroleum Reserve, a deep underground storage complex within the Gulf Coast containing around 600 million gallons of crude, per the report of CNet.
Biden said he is aware that "Americans are already hurting" amid US Gas Price Hike, and he will do all necessary measures "to limit the pain" of the people in the United States.
On Thursday, the President declared a string of heavy sanctions to be imposed against Russia that targets to finish the Russia Ukraine Crisis that would also result in the return of oil and gas prices to normal levels.
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