News of the European Union considering a six-month delay on sanctions against Iran, to allow European countries to find alternative supplies, seems to have lifted a heavy weight that was pinching the nerves of the world-wide oil industry, according to a spokesperson for AAA’s Auto Club South.
Jessica Brady said the news calmed concerns that Iran will try to obstruct the Strait of Hormuz, which transports up to 17 million barrels of oil a day. As a result, crude oil prices fell below $100 a barrel.
Crude oil closed at $98.70 a barrel on the New York Mercantile Exchange, on Jan. 13, she said, which is $2.86 less than the week prior.
“As long as tensions with Iran are easing, oil prices should remain below $100 a barrel,” said the spokeswoman. “The same bearish factors that put downward pressure on oil prices over the past few weeks are still prevalent, helping push both oil and retail gas prices lower.”
She said motorists should see either, steady, or lower, gasoline prices if oil keeps trading below $100 this week.
Brady said Georgia’s average price for a gallon of regular unleaded gasoline is $3.36, a 3-cent increase from the week before. A year ago, the state’s average price for regular unleaded was $3.01 a gallon. Drivers in Georgia are paying 35 cents more than they did last year.
Florida’s average price is $3.45 a gallon, a 2-cent increase over the previous week, and Tennessee’s price per gallon rose by a penny, to $3.25 a gallon, said Brady.
The national average price is $3.38 a gallon, an increase of one cent compared to last week, she added.
The price of crude oil is, of course, a key factor in the price of refined gasoline. Some believe crude oil will remain under $100 for at least a little while, because oil futures fell, recently, after France announced that Standard & Poor’s will shrink the country’s AAA credit rating, to AA, Brady said.
The reduced rating is a sign the European debt crisis continues, which is the kind of news that puts a burden on the market, and triggers speculation that Europe may enter a deep recession. Such a development would restrain the demand for oil, and would likely depress prices, she explained.