Gasoline prices are burning higher. The average gasoline price in the United States reached a record high for the month of January. According to data from the U.S. Energy Information Administration, the national average price for a gallon of regular gasoline has increased more than 8 percent since the end of 2011. Despite sinking demand, prices remain elevated as tensions remain high in the Middle East.
The national average for a gallon of regular gasoline has already hit $3.52 this year, which is the earliest the average price has ever hit the $3.50 mark. “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more.”
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On Wednesday, crude oil (NYSEARCA:USO) prices climbed higher after Iran’s Press TV reported Iran had banned oil exports to six European Union countries. The ban was a retaliation for EU sanctions against the Islamic state. Brent crude prices neared $120 per barrel on the news, the highest intra-day price since August. Meanwhile, U.S. crude increased to nearly $102 per barrel. Iran’s Oil Ministry denied the media report about banning oil exports to the EU. “We deny this report … If such a decision is made, it will be announced by Iran’s Supreme National Security Council,” a spokesman for the ministry told Reuters. However, oil prices remain high as the situation in the Middle East still remains questionable at best.
The EU’s 27 member states have decided to stop importing crude oil from Iran beginning on July 1, due to its reported nuclear program. While many thought Iran would take action before then, it is still uncertain how Iran will respond. “Bubbling of tensions with Iran will always be supportive of the oil price, and this latest development is no different,” said Harry Tchilinguirian, analyst at BNP Paribas.
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