Oil prices will increase through the end of the year as global inventories drop, leading to higher prices at the pump, the U.S. Energy Information Administration said Tuesday.

In its latest short-term outlook, the EIA forecasts the average price for a barrel of crude oil will increase almost 6% in the last quarter of 2023, increasing from $88 in August to $93 by December.

What You Need To Know

  • Crude oil prices are expected to increase 6% between August and the end of 2023, according to a new outlook from the U.S. Energy Information Administration

  • Over the summer, Saudi Arabia and OPEC announced oil production cuts

  • Saudi Arabia has extended its production cuts through the end of the year; OPEC's will last through 2024

  • The EIA forecasts gasoline prices will increase 12 cents per gallon between now and the end of 2023

Earlier this month, Saudi Arabia and Russia both announced extensions of their oil production cuts through the end of the year. In July, the Middle Eastern nation first announced it would reduce the amount of crude oil it taps by 1 million barrels per day. The world’s fourth-largest oil producer had been renewing the cuts monthly.

Oil prices have been rising since June following a similar OPEC announcement that it will cut crude oil production through 2024.

Crude oil prices being the primary component of gasoline prices, the production cuts will also lead to higher prices at the pump, the EIA said. The EIA expects per-gallon prices to increase 12 cents between now and the end of the year.

The national average for a gallon of regular is currently $3.836, according to AAA. While that’s lower than the highest recorded average of $5.034 in June 2022, it’s up significantly from the $3.175 average at the start of 2023.