Could Gas prices for 2013 drop with oil prices down after an Iran nuclear deal?
As previously reported by The Inquisitr, the United States is actually now the world’s largest oil exporter, and some people wonder why our gas prices aren’t going down to match this rise to global dominance.
Oil prices have mostly gone up a recent days, due in no small part to tensions in the Middle East. But now, oil prices are down due to an Iran nuclear deal meant to curtail Iran’s nuclear program. The deal, between Iran and six “world powers,” offers $7 billion in relief from sanctions. Iran has lost 60 percent of it’s $80 billion in revenue from oil prices since 2012 because of the sanctions. The current deal offers Iran a suspension of sanctions on gold and precious metals, the Iranian auto industry and petrochemical exports. The deal includes a cap on oil prices by not allowing Iran more than one million barrels of oil per day for six months. However, this works out for Iran because recent sales haven’t exceeding the limits anyways, and could actually lead to an increase in sales.
Analyst Kevin Book discusses the deal and what it might mean for Iran:
“From a big picture perspective, the deal… opens up the possibility of at least one million barrels per day of Iranian crude returning to world markets by the fourth quarter of 2014.”
The reduced political risk due to the Iran nuclear deal is another factor in the oil prices going down. Mr. Book also stated the impact of the Iran nuclear deal would have been bigger if not for the recent loss of most Libyan oil production. The stock market saw a rise in general at the news of the Iran nuclear deal, and its impact on oil prices could provide an opportunity for economic growth in all sectors. According to Jonathan Barratt CEO of research company Barratt’s Bulletin, another factor in oil prices going down is the lack of “monopoly”:
“Oil will continue to trade lower for some time… the Middle Eastern premium is eroding quite fast.”
So what do you think of oil prices being down after the Iran nuclear deal? Good news, I say!