The Phil Flynn Energy Report
Oil prices are roaring back as it seems the Biden administration is having second thoughts about quickly lifting sanctions on Iran, expecting huge demand on the global reopening trade. This comes as reports that the OPEC+ Joint Technical Committee meeting, which was to have taken place on May 25, has been delayed to May 31. We’re also seeing reports that in India’s capital, New Delhi, Covid-19 cases are falling and India may start relaxing its lockdown next week if new cases continue to drop.
The biggest weight on oil has been the presumed return of Iranian barrels to the market. Reuters reports the following:
U.S. Secretary of State Antony Blinken on Sunday said the United States has not seen yet whether Iran will move to comply with its nuclear commitments in order to have sanctions removed even as ongoing talks have shown progress.
Iran's president last week said the United States was ready to lift trade sanctions, although a senior Iranian official contradicted him and European diplomats said difficult issues remained.
Indirect talks have been underway in Vienna as the Biden administration seeks a path forward with Iran, including how Tehran can resume compliance with its 2105 nuclear deal with world powers.
"Iran, I think, knows what it needs to do to come back into compliance on the nuclear side, and what we haven't yet seen is whether Iran is ready and willing to make a decision to do what it has to do. That's the test and we don't yet have an answer," Blinken told ABC News' "This Week With George Stephanopoulos" program.
He may also want to point out that Iran has been a major factor in global instability and can still be considered a state sponsor of terror. Speaking of which, Saudi Arabian state media reports that “the Saudi-led military coalition engaged in Yemen thwarted an ‘imminent’ Houthi attack using an explosives-laden boat south of the Red Sea.”
Any delay on lifting sanctions on Iran would be another bullish factor in a market that may need Iranian barrels to meet demand later this year. Iran says that they’ll extend the IAEA monitoring for 1 month so negotiations can continue.
Gasoline prices are stable as today’s AAA National Average is at $3.039 for regular unleaded. That’s down slightly from the high, but still elevated from the Colonial Pipeline shutdown. We expect a surge in demand over the Memorial Day holiday that will come close to breaking records; more than likely, that should keep the gasoline prices above the $3.00 mark for the rest of the summer! We should see another price spike in mid-summer.
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