Why you’ll be paying more at the pump
One step forward, one step back… as crude oil prices were up more than 3% on Tuesday. This jump coming on the heels of the US State Department announcement that companies will be required to cut all oil imports from Iran by November. Interestingly enough, OPEC and other producers agreed to raise output to prevent this exact thing (price increase) from happening.
The United States is committed… to completely isolating Iran. This includes cutting Iranian crude imports. This is significant because Iran is OPEC’s third-largest oil producer, exporting more than two-million barrels per day. Companies, such as Total and Shell, have also committed to avoid Iranian oil. Other oil companies may follow suit in order to maintain relations with the US.
We seriously want gas… to stay under $3 a gallon in the United States. Other big users, such as India and China, would also appreciate some increased oil production to keep prices from rising too high. Saudi Arabia is planning to increase output to record high next month – from 10 million to 10.8 million barrels per day. We may also see more demand for US oil specifically to cover the shortage.