NEW YORK — U.S. drivers can look forward to $2 gas later this year, thanks in part to the Iran nuclear deal announced Tuesday.
Gas may only dip a few cents when the Iranian oil first starts to flow again, but by September drivers could see big savings.
“Once we get past Labor Day, we should see gas falling by 10 to 15
cents a month,” said Tom Kloza, chief oil analyst with the Oil Price
Information Service. “By December a lot of places are going to see
gasoline at $2 or less.”
Iran hasn’t been able to sell oil to the United States since 1995.
Most major Western countries imposed sanctions within the last five
years aimed at curbing Iran’s nuclear program. Instead it’s been selling
to China, India, Turkey and other developing markets.
Whole crude oil and gasoline prices were both slightly lower Tuesday on news of a deal between six major powers and Iran.
“[Iran] will only add to the oil glut on the market and increase the
selling pressure,” wrote Naeem Aslam, chief market analyst at Ava Trade.
The details of how sanctions will be lifted is not yet known. Some
critics in Congress want to keep U.S. sanctions in place, but President
Obama has vowed to veto any such efforts. And even if U.S. sanctions do
stay in place for a while, the flow of Iranian oil to Europe will push
down prices in global oil markets.
Iran could add as much as 500,000 barrels of oil per day to worldwide
markets by the end of this year, according to experts at a recent
Credit Suisse conference on Iranian sanctions and oil. The International
Energy Agency estimates Iran could add as much as 800,000 barrels a day
months after sanctions are lifted. Another 30 million barrels of
Iranian crude are estimated to be in storage and ready for sale,
according to FACTS Global Energy, an industry consultancy.
The average gas price at U.S. stations is now $2.78 for a gallon of
regular, according to AAA. Gas prices had fallen below $2 at most U.S.
gas stations this past winter.
Even without Iranian oil, global production has been booming. North
America, OPEC nations and record production from Russia and Iraq have
been adding to a glut of oil on world markets. Economic problems in
Europe and China also are curbing demand.
Kloza said Iran will add even more oil to the markets in 2016 as it
improves its oil industry’s infrastructure, which has suffered under the
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