Oil prices are roaring back as it seems the Biden administration is having second thoughts about quickly lifting sanctions on Iran and expectations for huge demand on the global re-opening trade. This comes as reports that the OPEC+ Joint Technical Committee, which was to have taken place on May 25, has been delayed to May 31, I assume because they want to see the fate of the Iran talks but the main meeting will still be held on June 1.
We also are seeing reports that India’s capital New Delhi coronavirus cases are falling and India may start relaxing coronavirus lockdown next week if its new cases continue to drop.
The biggest weight on oil has been the presumed return of Iranian barrels to the market. Reuters reports, “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 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 2015 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 decide 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 as reported by Reuters.
Also, he may want to point out that Iran has been a major factor in global instability and is still a state sponsor of terror. Speaking of which, Arabiya TV reports that a Saudi-led coalition said they’ve thwarted an imminent attack in the Red Sea by the Yemeni Houthis using an explosive-laden boat.
Any delay on sanctions lifting 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 will extend the IAEA monitoring for one month so negotiations can continue.
Gasoline prices are stable as today’s AAA National Average is at $3.039 for regular unleaded. That is 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 and that should keep the gasoline prices above the $3.00 mark more than likely for the rest of the summer! We should see another spike in price in Mid-summer.