Analyst Predicts Lower Gasoline Rates As Saudi Arabia's Crude Production Cuts Led To High Crude Prices

Oil market spectators anticipate a decrease in gasoline prices in the coming months, thanks to Saudi Arabia’s production cuts that have led to high crude prices.

According to a report by Business Insider, energy expert Paul Sankey expressed his views on CNBC. He stated that the global oil market is largely dependent on U.S. gasoline consumption, which has been consistently weakening.

This ongoing trend was further highlighted as both Brent crude and West Texas Intermediate oil fell by as much as 6% on Wednesday. Sankey referred to the significant price drop between crude and refined products as a clear sign that “the Saudis pushed the oil price too high.”

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Despite the decreasing demand, the supply side is anticipated to remain steady. Sankey mentioned that it is unlikely that Saudi Arabia will further reduce production to maintain prices. The kingdom has already reduced output to 9 million barrels a day, and any further cuts could potentially harm its market share in oil.

Meanwhile, U.S. domestic oil production remains strong, with supplies from sanctioned regimes such as Iran and Venezuela helping to offset cuts in other areas. Sankey believes these factors have not been fully appreciated by the market.

He ended his comments by predicting that lower wholesale prices will soon be mirrored at gas stations as demand continues to slide.

“You will see lower prices at the pump over the coming months,” he added.

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