Wisconsin Chronicle

Oil prices fall on word of nuclear accord with Iran

Oil prices fall on word of nuclear accord with Iran

Word that a preliminary accord with Iran to limit development over its nuclear program pushed oil futures down Thursday. Benchmark West Texas Intermediate crude fell 2.6% to $48.79 a barrel, while Brent Crude tumbled  4% to $54.82. Wholesale U.S. gasoline prices eased 4% to $1.75.70 a gallon on the New York Mercantile Exchange.oil-extraction

Economic sanctions have severely limited oil-rich Iran from exporting crude, as well as some foreign investments in Iran’s oil, gas and petrochemical industries. Iran currently exports about 1 million barrels of crude a day, down more than 50% from the 2.5 million barrels it was shipping before U.S. and European imposed additional sanctions in 2012.

The Energy Information Administration reported that U.S. crude inventories rose to record levels for the 12th consecutive week last week. With the global oil markets already glutted, crude prices are expected to continue sliding. Tanker brokers estimate that Iran has stored at least 30 million barrels in super tankers ahead of a potential comprehensive agreement limiting its nuclear plans.

“I think this news has the potential to put more downward pressure on crude and gasoline prices in 2016 and beyond,” says Tom Kloza, senior energy analyst for the Oil Price Information Service. “This will return to background noise soon, where the U.S. and the world still needs to deal with a still-swelling petroleum glut.” “Bottom line: this is a cheap year for fuel, with our without cooperation from Iran,” Kloza says. U.S. gasoline prices currently average $2.40 a gallon, down 32.6% from year-ago levels, but up nearly 20% from a six-year low of $2.03 a gallon  in late January.