Crude prices have moved higher this week, following President Trump’s decision to re-impose economic sanctions on Iran and withdraw the U.S. from the Iran Nuclear Deal. Set in 2015 under the Obama Administration, the U.S. – along with 5 other nations, including China, Russia, Germany, and the European Union – entered into the deal that lifted economic sanctions on Tehran in exchange for the country downsizing its nuclear program. Some of the pre-2015 sanctions targeted the Iranian energy sector and impeded Iran’s ability to sell oil. With those sanctions being re-imposed in the next 3-6 months, Iran’s crude exports are forecasted to decrease, contributing to already declining global crude supplies amid growing global demand.

Also lifting crude prices even further, the Energy Information Administration’s (EIA) petroleum report for the week ending on May 4 revealed that crude inventories fell by 2.2 million bbl. At 433.8 bbl, crude inventories around the country are 88.8 million bbl lower than were they were last year at this time. Domestic crude inventories have fallen steadily since OPEC and other large producers, including Russia, have reduced their combined output since the beginning of 2017. Increased crude prices are likely to push gas prices even higher later this summer – potentially driving the national average to $3/gallon.