The preliminary nuclear deal between Iran and six world powers could lower crude oil prices on the prospect of increased Iranian oil output, exerting downward pressure on Long Island gasoline prices, experts said.
But rising demand from holiday travel and shopping trips could render any impact nearly invisible to drivers in coming weeks.
While the agreement does not allow Iran to export more oil right away, it raises the possibility that a more comprehensive agreement would eventually allow Iran to add about a million barrels a day to the world market.
Iran reached an agreement Sunday with the United States and five other world powers to freeze its nuclear program for six months while the two sides work on a more permanent deal covering Iran's development of nuclear technology.
Kevin Book, an analyst at ClearView Energy Partners in Washington, told The Associated Press that the price of Brent crude, an international benchmark used to price oil used by many U.S. refineries, could fall to $90 a barrel by the end of next year if talks yield a final agreement. That's 19 percent below Brent's level Monday, where it closed down 5 cents at $111 a barrel.
U.S. crude oil futures fell by only 75 cents a barrel in trading Monday, to $94.09 a barrel.
"From the perspective of market reaction, it doesn't look like it [the agreement] is going to have much impact," said market analyst Stephen Schork, editor of the industry newsletter The Schork Report.
Historically, all other things being equal, the price of gasoline at the pumps moves about 2 cents for every dollar of movement in the price of crude oil, he said. But it remains to be seen whether the preliminary agreement with Iran will be finalized and, then, how much of an impact it would have on prices, Schork said.
Long Island drivers have gotten a break at the pumps this fall; regular gas fell to a recent low of $3.507 a gallon on Nov. 11, down 50.5 cents a gallon from the recent high point of $4.012 a gallon on July 23, according to the AAA.
In recent weeks, however, prices rose from what Schork said was a shortage in this region caused by an outage at the Phillips 66 Bayway Refinery in Linden, N.J. Bloomberg News said repairs have been completed. On Monday regular averaged $3.604 a gallon on Long Island, the motorist group said. Gasoline for December delivery declined 4.54 cents to settle at $2.6807 a gallon on the New York Mercantile Exchange.
With wire service reports