09 April 2012 21:57 [Source: ICIS news]
US and European sanctions on Iran, aimed at hampering the country’s ability to finance its nuclear weapon programme, have increased concerns of tightened oil supply from Iran. This has caused the cost of crude, and accordingly, the cost of gasoline in the US, to rise, said analyst Phil Flynn with PFGBest.
“Countries have to replace Iranian oil imports, which is keeping US gasoline artificially high, especially on the east coast,” said Flynn.
The current national average for regular gasoline is at $3.927/gal, only slightly up from one week ago, which was at $3.925/gal, according to the US automobile organization AAA. One month ago, AAA had the average price of gasoline at $3.778/gal.
Flynn said the other factors contributing to higher prices are supply and demand.
The US Energy Information Administration (EIA) said gasoline consumption rose by 73,000 bbl/day to reach 8.783m bbl/day for the week ended 30 March, but consumption was 6.2% lower compared to the same time period in 2011.
Despite lessened demand for gasoline in the US, Flynn said there is a lot of demand in emerging markets and in Europe, causing US gasoline prices to rise. Additionally, the use of the more expensive-to-produce summer gasoline blends as well as the approaching busier summer driving season could push prices even higher.
But Flynn said the situation with Iran will have the largest impact on increasing gasoline prices.
“We could be seeing the highs right now,” he said. “If we step back from the Iranian situation, prices could collapse. If the conflict with Iran continues or worsens, prices could go even higher than they are right now.”
However, according to analyst Patrick DeHaan with GasBuddy.com, gasoline prices could start falling as soon as EIA data shows that oil inventories continue to rise, reaching levels that are 3% higher than at this time one year prior.
“Prices may have already peaked, although more time is needed to make an exact determination,” said DeHaan.
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