Iranian Nuke Deal Could Drop Oil Prices Further
Louisiana oil industry executives were starting to whisper amongst themselves that maybe the worst was over and the price of oil was about to stage a comeback. Those whispers may have been quieted once again by and international agreement involving Iran and the rest of the free world.
The deal with Iran over its nuclear programs, should it come to fruition and actually be maintained, could allow that nation to start selling oil again. Some experts are saying that this will increase the supply available by billions of barrels. While it might seem like good news for drivers. It is not the best of news for oil producers, oil field service companies, and economies that are built on strong oil prices.
David Dismukes, the Executive Director for LSU's Center for Energy Studies, says the oil prices will directly reflect the additional supply in the marketplace.
So it would be a substantial change. Somebody would either have to cut back or prices are going to have to drop or some kind of combination in order to accommodate all these barrels.
Prices for oil fell eight percent on the New York Mercantile Exchange
on the news of the Iranian deal. This could mean even more issues for local producers and service companies that support those producers. Dismukes told the Louisiana Radio Network the only silver lining to what could be a very dark cloud would be the price of gasoline.
If this is an agreement that can hold water it might wind up seeing a reduction in retail gasoline for a good period, at least for the summer driving season.
The bottom line is we will just have to wait and see how Iran reacts and how the rest of the world reacts to this agreement. There is also the question of how seriously the Iranian government will hold to the covenants on this agreement. Their recent history indicates they might have trouble living up to the standards expected by the rest of the world.