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OPEC announces it will cut production by 2 million barrels a day, a move likely to send gas and oil prices back up

NBC News 10/5/2022 Marlene Lenthang and Rob Wile
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The OPEC+ alliance announced it will cut oil production by 2 million barrels a day, the oil cartel and its allies announced Wednesday, which may set the cost of gas rising again after a year of tumultuous prices at the pump. 

The decision comes after the summer saw major spikes in the price of oil and gas amid the Russian invasion of Ukraine. Prices have trended downward from July to mid-September and President Joe Biden has sought to reduce gas prices, and stress on Americans’ wallets, ahead of the midterm elections.

The OPEC+ alliance, whose de facto leader is Saudi Arabia, announced the decision in Vienna, Austria, Wednesday.

But prices had begun trending higher in recent weeks amid increased demand and refinery issues in the U.S. Wednesday, prices stood at $3.83, the highest level since late August.

“The regional differences in gas prices are stark at the moment, with prices on the West Coast hitting $6 a gallon and higher, while Texas and Gulf Coast states have prices dipping below $3 in some areas.” said Andrew Gross, AAA spokesperson, in a statement Monday.

At least six California refineries are undergoing maintenance, he said, and there is limited pipeline supply to the West Coast from locations east of the Rockies.

Political analysts have observed a strong correlation between gas prices and Biden's approval rating, as voters home in on gas prices as a proxy for inflation and thus the state of the economy.

Wall Street analysts say the Biden Administration is likely to counter OPEC's move by releasing stocks from the U.S.'s strategic petroleum reserve, and even boosting the so-called NOPEC bill that would penalize other oil producing states by opening them up to antitrust suits.

OPEC+ is comprised of 13 oil-exporting countries and 11 non-member allied countries, including Russia.

This is a developing story. Please check back for updates.

This article was originally published on NBCNews.com

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