Americans should expect elevated oil and gas prices through late summer even if the Strait of Hormuz reopens soon, Rapidan Energy President Bob McNally said today.
“The shock absorbers that the global oil market has benefited from in March and April and May are starting to wear off,” he warned during an appearance on ABC News’ “This Week.”
One of those shock absorbers is the US strategic reserve, which is quickly depleting amid the global oil disruption from the war in Iran. The supply was down another 7.9 million barrels between May 29 and June 5, according to the Energy Information Administration.
Details remain murky as to whether a peace agreement will be signed with Iran, though President Donald Trump had signaled a deal would be finalized as soon as Sunday.
McNally pointed out that “oil will flow” if the US and Iran reach a deal that sticks. Otherwise, oil prices could skyrocket to the mid-$100 range and US gas prices, which have steadily declined in recent weeks, could reach a new high of $5 a gallon.
The national average gas price fell to $4.07 a gallon on Sunday, according to AAA.
Elevated prices have come down slightly since surging above $100 a barrel in March. Brent crude, the global benchmark, settled at $82.25 on Friday, while US crude settled at $84.29 — down 0.4% and 0.7%, respectively.
Reopening the Strait of Hormuz, which accounts for about one-fifth of the world’s oil flows, is considered crucial to bringing an end to the largest oil disruption in history. McNally noted that more than a billion barrels of oil have been lost due to the war.
Source: CNN
– Agencies
