With the Iran sanctions looming, international oil markets are looking for alternative crude suppliers. The United States and the European Union (EU) as well as many others, have initially turned to Saudi Arabia. However, there is uncertainty of the Saudi’s ability to fill in the production gaps given the recent turmoil over a murdered Saudi Arabian journalist. One source of additional crude production available is Russia, according to Igor Sechin, the Chief Executive of Russian oil major Rosneft.
On September 17th I wrote about "Relief at the Pumps," talking about lower gas prices are on the way. Since then retail gas prices have moved higher. In Pittsburgh, PA 87 grade Unleaded gasoline prices are now averaging $3.15 per gallon with a high of $3.239.
Crude prices have been surging the last few weeks with the expected loss of Iranian supply beginning November 4th. With that, the U.S. has been ramping up pressure on OPEC to increase production in an attempt to lower oil prices.
India and China are currently discussing forming an Oil Buyer’s Club to counter the market power of OPEC. OPEC currently exists to stabilize the price of oil and reduce volatility, by either artificially raising the price of crude, or opening up their spigots and driving prices back down when competition starts to gain momentum. India and China are also trying to gain support from Japan and Europe to further strengthen their counter-OPEC position.