Fuels analyst Harold Hommes says Iran is stockpiling at least 30-million gallons of crude oil.
“Iran is ready to begin exporting,” Hommes says. “They’ve got, from my understanding, loaded vessels in place. They are actually using vessels as storage containers.”
If the multi-national agreement is approved, sanctions on Iran will be dropped and Hommes says that oil could be shipped to the U.S.
“That is going to hit the market, certainly putting downward pressure on crude prices again and that, in turn, will put downward pressure on refined products,” he says. Some analysts predict the impact could push gas below $2 a gallon, but Hommes is hesitant.
“I don’t know if we are going to go back to $2 gas, but it could certainly happen,” according to Hommes. “If it does, it’s going to be well into the fall, past our peak driving season.”
He expects a gradual impact as gas production isn’t going to expand.
“The refiners can only handle so much. They can boost capacity on a marginal level, but it’s primarily going to put a softening initially on the crude side of things,” Hommes explains. “Then eventually in a more measure manner, we’ll start that downward cycle on the refined products.”
The slow integration will likely keep gas prices from making a big drop all at once.