Gas Prices to Fall Even More as Iran Sets to Sell Even More Oil
Image: Paul Lowry
Well, good news, gasoline and oil-product consumers! Iran’s oil ministers have stated that the country will be stepping up its oil production to 500,000 barrels shipped per day, with the intention that that number will increase to a goal of 2 million per day. That means that prices for gas and other petroleum products are about to drop even more as Iran prepares to pump even more oil into the market.
This is bad news for oil producers, as the price of crude oil steadily drops, down to what Tom Kloza, global head of energy analysis for the Oil Price Information Service, predicts could be sub-$20 prices per barrel (prices only recently dipped below $30, an industry milestone).
Bad news, that is, for oil producers who aren’t Iran. With the sanctions lifted, Iran is now able to sell unlimited amounts of oil, where previously it could only sell limited amounts to a few Asian countries. In addition, Iran is able to produce oil more cheaply than other nations, with a “lifting cost” of as little as $10 per barrel to extract oil. So, even as prices drop, Iran is still making money off of oil production.
This seems to have set off a certain amount of competition between Iran and Saudi Arabia in particular, who has long been Iran’s rival in the Organization of the Petroleum Exporting Countries. The return of Iran to the market has increased tensions already roused by conflicts between the two countries in Yemen and Syria. Saudi Arabia has refused to lower its oil production, and has been increasing its presence in the European market in anticipation.
News Sources: The New York Times (subscription required), USA Today
The News Wheel is a digital auto magazine providing readers with a fresh perspective on the latest car news. We’re located in the heart of America (Dayton, Ohio) and our goal is to deliver an entertaining and informative perspective on what’s trending in the automotive world. See more articles from The News Wheel.