The Organization of the Petroleum Exporting Countries (OPEC) rocked the oil-producing world when they recently announced they would cut production by 1 million barrels a day. OPEC consists of 13 countries that collectively make up around 1/3 of the world's oil production, meaning this sudden and largely unexpected cut to oil production has created global ramifications in a short time. We've already seen this in Strathmore, as our gas prices rose by a staggering 14 cents per litre overnight, going from 133.9 cents per litre to 147.9 cents per litre at most Strathmore gas stations.

Gas Buddy's Head of Petroleum Analysis Patrick De Haan explained this "completely unexpected" cut to production means oil prices are now up almost 25% in the last month, going from around $65 USD a barrel to around $83 USD a barrel. While De Haan said he can't comment on why specifically OPEC would have done this, he said it was most likely a deliberate course of action to raise prices.

"That is largely one of the major reasons why they probably did this, was to boost the price of oil," he said. 

While this cut to oil prices is without a doubt the biggest factor in why gas prices rose so much, De Haan added we typically see prices rise at this time of year normally, as people start to drive more as the weather gets nicer, thus raising demand. He added this time of year is also when refineries are still undergoing maintenance, meaning there is less supply to meet demand

Warmer weather also means stations could start using a summer blend of gasoline, which is designed to burn cleaner and have less harmful emissions for the ozone layer. This summer blend is used for two reasons:

  1. More people drive during the spring and summer compared to winter, so lowering total emissions is good for the environment
  2. De Haan explained that "colder temperatures during the winter don't have the same interaction with emissions as warmer air does." 

The OPEC countries are:

  • Algeria
  • Angola
  • Congo
  • Equatorial Guinea
  • Gabon
  • Iran
  • Iraq
  • Kuwait
  • Libya
  • Nigeria
  • Saudi Arabia
  • United Arab Emirates
  • Venezuela