The U.S. and Iran are in the middle of peace talks to potentially end the war.
Last week, the two sides agreed to a 60-day ceasefire that included one important concession: Iran would open the Strait of Hormuz, a chokepoint for international oil trade.
CNN reports ships are moving through the strait, though not in pre-war numbers.
So what does this all mean for gas prices?
Tom Seng, Assistant Professor of Professional Practice in Energy Finance with TCU's Neeley School of Business, joined NTX Now's Miranda Suarez and Ron Corning to explain how all this could impact the oil market — and consumer prices.
These interview highlights have been edited for length and clarity. To hear the full conversation, click the 'listen' button above.
If peace talks are successful, will gas prices return to normal?
Seng says he doesn't expect prices to bounce back to pre-war levels, at least not any time soon.
"There are so many unknowns that we still have to figure out," he said. "There's still the issue out there as to whether or not Iran's going to charge tolls or some type of administrative fees."
Seng said it's also important to conduct a detailed assessment of infrastructure damage, looking at oil fields and export terminals, to determine repair costs.
"At this point, I'd be very surprised if we saw oil and gasoline prices at pre-war levels for at least a year," he said.
How big of a disruption has the U.S. war in Iran been to the oil market?
Seng estimates more than 15% of the global oil supply has been interrupted since the Iranian Republic Council closed the Strait of Hormuz at the onset of the conflict.
"Pre-war, the global market was balanced," he said. "All of a sudden, you take away 15 million barrels a day — that has to come from somewhere, and it isn't as though there are oil fields just sitting out there ready to turn on additional wells."
Instead, Seng says countries impacted by the closure have had to supplement with oil reserves from elsewhere in the world.
The U.S. is rolling back decades-old sanctions on Iran and Iranian oil. What does that mean?
"When the sanctions were on, essentially, we could impose financial fines on shipping companies that were transporting Iranian crude [oil] or any buyers or financial institutions that were dealing with Iran," Seng said. "So, this is pretty much the green light for them to return to what would be a normal level of both production and exports into the global market."
He said having those sanctions lifted amounts to a financial boon for Iran.
Miranda Suarez and Ron Corning are the hosts of KERA's NTX Now. Got a tip? Email Miranda at msuarez@kera.org or Ron at rcorning@kera.org.
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