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Gas prices face upward pressure on Iran Nuclear Deal

Staff Reports • Updated May 9, 2018 at 8:00 AM

Tennessee gas prices averaged $2.59 Sunday, which was the same as the week prior, and 22 cents less than the national average, however, Tennessee motorists paid 47 cents more per gallon than the same time last year. 

The most expensive gas price averages in Tennessee were in Kingsport-Bristol at $2.65, Johnson City at $2.63 and Jackson at $2.63. The least expensive gas price averages in Tennessee were in Chattanooga at $2.53, Knoxville at $2.55 and Clarksville-Hopkinsville at $2.56.

The rising price of oil may drag gas prices higher this week. Oil prices reached a new 2018 high, on the belief that President Donald Trump may pull out of the Iran Nuclear Deal. Such a move would likely reinstate sanctions, which would result in reduced global supply and higher fuel prices. 

About half the price of what motorists pay at the pump is determined by the price of oil. Last week, crude rose more than $1, which usually equates to a 2.5-cent increase at the pump. Friday’s closing price of $69.72 per barrel was the highest daily settlement since November 2014. At that time, gas prices averaged around $2.80 nationwide and $2.59 in Tennessee, which are about the same as what motorists currently pay. 

Trump has until Saturday to decide whether to extend the existing Iran Nuclear Deal, or restore penalties on one of the world’s biggest oil producers. Restoring sanctions could eliminate 1 million barrels of Iranian oil per day, further constricting supplies in what is already considered to be a tight global market. Until a decision is made, the oil market remains restless; inching toward a $70 per barrel threshold, which hasn’t been breached since Nov. 26, 2104. 

“Preliminary projections had gasoline averaging around $2.75 this summer,” said Mark Jenkins, spokesman for AAA. “However, all bets are off right now, pending the president’s decision on the Iran Nuclear Deal. Gas prices were relatively stagnant last week, but we could see a slight boost, based on oil price gains last week and the potential for additional hikes in the coming days.”

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