While average gas prices remain under $4 a gallon both in Illinois and nationwide, prices have climbed significantly in the past week - with a gallon of unleaded gas costing an additional 14 cents on average.
As of Monday, the average price for a gallon of unleaded gas was $3.83 - compared to $3.69 a week earlier, according to numbers released by AAA. In the city of Chicago, the cost is higher - at $4.23 a gallon, which also marks a 14-cent uptick from the week prior.
A notable increase has also occurred nationwide, although the national average is more than 30 cents lower than that in Illinois. The average cost for a gallon of unleaded gas, on a national level, is $3.51 a gallon, a 7-cent jump from a week prior.
While gas prices are significantly lower than during the same period last year - when the national average was $4.19 - it appears there's a specific reason for the most recent uptick.
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Prices quickly jumped over the weekend, according to AAA, after Saudi Arabia and the Organization of the Petroleum Exporting Countries announced a surprise production cut. Oil production will be slashed by more than a million barrels a day starting in May, in an apparent effort to prop up oil prices.
The decision comes after prices for international benchmark crude slumped amid a slowing global economy that needs less fuel for travel and industry. It adds to a cut of 2 million barrels per day announced in October. Between the two cuts, that’s about 3% of the world’s oil supply.
Saudi Arabia, OPEC’s dominant member, insists the move is “precautionary” to avoid a deeper slide in oil prices.
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Following the announcement, oil prices shot up almost immediately.
The U.S. price of oil traded above $80 a barrel on Sunday evening - a number that hasn't been surpassed since early March. That shift marks an increase of nearly $5 or 6.5% more than the closing price on Friday, and the hike is equivalent to a 13-percent jump in gas prices.
Analysts say supply and demand are relatively well balanced, which means production cuts could push prices higher in coming months.
The refineries that turn crude into gasoline, diesel and jet fuel are getting ready for their summer production surge to meet the annual increase in travel demand.
In the U.S., gasoline prices are highly dependent on crude, which makes up about half of the price per gallon. Lower oil prices have meant U.S. drivers have seen the average price fall from records of over $5 per gallon in mid-2022 to $3.50 per gallon this week, according to motor club AAA.
Those higher prices could fuel global inflation in a cycle that forces central banks to keep hiking interest rates, which crimp economic growth, he said.
