Yet today the Wall Street Journal reports that:
“Iran is refusing to allow inspectors access to nuclear-related sites and hindering a probe by the United Nations atomic agency while continuing to expand its nuclear activities, the International Atomic Energy Agency said in two confidential reports Tuesday, casting doubt on efforts to revive the 2015 nuclear deal. The reports leave the Biden administration and its European allies facing a choice between pushing for a formal rebuke of Iran—which Tehran’s new hard-line government has warned could scuttle the resumption of nuclear talks—or refraining from action, potentially undercutting the authority of the IAEA and its leadership. The future of the nuclear deal is already in the balance. New Iranian President Ebrahim Raisi, pressed by European and U.S. officials to quickly resume the talks on restoring the deal, has said his government is prepared to return to the Vienna negotiations but refused to fix a date. The last talks took place in June.”
For oil traders, this means that anyone betting on a quick return of Iranian oil will have to wait. Legal oil that is. Iran exports are close to three million barrels a day.
Gasoline prices at the pump according to AAA have stabilized at $3.18, which is just 3 cents more expensive on the week. The storm took about 13% of U.S. refinery capacity offline and while there are no firm re-start dates, refineries are expected to be back online this month. Gasoline stock levels are currently at 227.2 million bbl, which is a healthy level. However, stock levels could tighten until refineries resume normal operations. Typically, a constraint on stocks would mean higher gas prices, but with demand expected to decrease going into the fall, price fluctuation should be minimal. Today’s national average is the same as last month, but 96 cents more than a year ago.
My take on gasoline prices is that they probably are going to stay strong at a time when normally gasoline prices fall. I think it’s at some point refineries don’t get back up and running but we could see a price spike going into the holiday season. We also expected a rebound in the price of crude though we are on resistance today. Remember we should be in the calm of the supply and demand storm now that the shoulder season is upon us but this winter we expect very strong prices for oil and natural gas.
The downside risk is COVID. MSN reports:
“Since being discovered in Colombia in January, the mu variant of COVID-19 has spread to nearly four dozen countries and has made its presence known in Hawaii and Alaska. It has so far been found in 49 states with Nebraska being the only state to not have a mu variant case detected. Health officials believe mu is even more transmissible than the delta variant and has the potential to resist vaccines.”
Oh boy.