Global oil prices plunged and then swung back wildly on Tuesday, following a series of conflicting news reports prior to President Donald Trump’s decision to withdraw from the Iran nuclear deal.
The price of crude oil hit $70 a barrel this week for the first time since 2014, then plunged by around $3 Tuesday morning amid speculation that the president would not re-certify the 2015 agreement. Crude futures then regained the morning’s losses before closing down 2.4 percent after Trump’s announcement that the U.S. would be pulling out of the multilateral accord.
So what do all these global gyrations mean for your wallet? Higher prices at the pump.
This time last year, motorists were paying around $2.34 per gallon. Today, the national per-gallon average is $2.81 ($3.63 in California). With summer driving season already pressuring those prices even higher as families take to the roads for their vacation, Trump’s decision is one more factor that could push the price point beyond $3 a gallon for most of America — the level at which many people begin to change their driving habits.
However, though consumers should brace for higher gasoline prices this summer regardless, the reality is that Trump’s decision to reimpose sanctions isn’t likely to affect global crude oil supply with any immediacy.
“One reason is that China and India loom larger today as Iranian oil buyers than they ever did, and will not trip over each other to comply with U.S. unilateral sanctions,” Antoine Halff, a director at the Center on Global Energy Policy, told NBC News. “Another reason is that Iran has been ramping up oilfield activity in recent weeks, likely setting the stage for further increases in exports. In addition, it would likely take some time for Washington to sort out the details of the sanctions’ implementation.”
There’s one other important issue for Trump as the nation heads into mid-term elections: If the price of gas continues to rise, Trump risks diluting any gains from his tax cuts for middle America — which could prompt some voters to reassess the personal impact of the president’s policies.