The price of crude oil fell on signs of progress in US-Iran peace talks, but US gasoline prices continued to rise, with President Donald Trump running out of moves to lower them.
If negotiators do manage to agree on the one-page memo that is reportedly under discussion, it could still be at least another month before the US lifts its naval blockade and anything like normal oil tanker traffic can resume through the Strait of Hormuz. “A six-to-eight-week lag between credible access conditions and real-flow normalization is not a conservative estimate, it’s a structural feature of how shipping markets work,” Rystad Energy chief oil analyst Paola Rodriguez-Masiu said. “Global markets should not mistake a ceasefire headline for a supply headline.” In the meantime, Iran’s own oil sector is running into trouble from the US export blockade.
On the home front, Congressional Democrats are beginning to clamor for a gas tax holiday, which the White House told Axios is “not currently under consideration.” A report by the Bipartisan Policy Center concluded that temporarily suspending gas taxes could add $12 billion to the federal deficit, and shave only a few cents off per-gallon prices. The Trump administration’s latest solution was to offer an additional 92 million barrels from the Strategic Petroleum Reserve on loan to oil companies. But the drawdown of domestic reserves only means a greater risk of physical shortages, like what countries in Asia already face. “You can’t keep pulling down inventories, or you’re about to start hitting tank bottoms in some spots,” Houston equities investor Dan Pickering said in his podcast.
