Oil prices dip after nuclear deal with Iran
LONDON — Oil prices dipped Monday on the heels of an interim agreement between Iran and the United States and other world powers to temporarily freeze Tehran’s nuclear program.
But few experts expect any significant change to consumer energy prices, at least in the short term.
In terms of market fundamentals, little has changed, despite the United States’ agreement to provide $6 billion to $7 billion in sanctions relief to Iran, much of it in the form of oil revenue that has been frozen in foreign banks.
Analysts say Iran is unlikely to be able to increase its exports much, if at all, during the six-month period covered by the deal, because the Washington-led coalition has not lifted its embargo against Iranian oil.
The main buyers will continue to be those that, given their heavy reliance on energy imports, have been given waivers by the United States: China, India, South Korea and Japan.
Gregg Laskoski, an analyst at Gasbuddy.com, a website that advises motorists on where to find the least expensive gasoline in the United States and Canada, said the Iran deal “may bring some calm to markets,” but he said he doubted it would have a significant impact soon.
Even before the weekend announcement, American drivers were likely to pay less at the gas pump this Thanksgiving holiday than they did last year. The national average for gasoline is $3.26 a gallon compared with $3.43 a gallon a year earlier, according to Laskoski. Consumers are benefiting from a year that has been “relatively quiet in terms of refinery problems,” he said, compared with the autumn of 2012, when refineries took a beating from Hurricane Sandy.
Analysts said the main benefit of the weekend’s understanding with Iran may be the psychological impact on the market, which has long been propped up by fears of a supply disruption resulting from the standoff between Iran and the United States and its allies.
If those fears are defused, the energy markets might begin to more fully reflect purer issues like supply and demand, as well as the global search for alternative energy sources.
“There was always the risk of military conflict at the end of the path of sanctions if they proved ineffective,” said Simon Wardell, an analyst at the market research firm IHS in London. “That was always one of the factors keeping prices elevated and that begins to deflate now.”