Tensions over Iran’s nuclear program helped push the price of oil to post-recession highs over the past year. Those eased with Tehran’s announcement that it will return to talks aimed at curbing the program next week.
Daniel Yergin is chairman of energy research firm IHS CERA and author of The Quest. He says the coming sanctions against Iranian oil exports could cause prices to bounce. But he notes that rising supplies from other sources provide a cushion for consumers.
“The essence of the situation is that these sanctions against Iran are going to go into full effect at the end of June. But they’re already having an impact and are squeezing Iranian oil exports out of the market. Those missing barrels are being made up, not only by supplies that countries like Saudi Arabia put into the market, but also by this substantial increase in domestic US production that we’re seeing.”
Yergin says falling demand for oil from Europe and China is also pushing gas prices down.