MARY LOUISE KELLY, HOST:
Well, if you want a visible sign of the uncertainty being caused by President Trump's decision to withdraw from the Iran deal, keep your eye on oil prices. They have been rising steadily for a bunch of reasons. The price of crude is up more than 15 percent this year, and Iran is a major oil producer. So this decision could roil energy markets around the world. NPR's Uri Berliner joins us now with more on that. Hey there, Uri.
URI BERLINER, BYLINE: Hello, Mary Louise.
KELLY: So do we know yet how this decision to pull out of the Iran nuclear deal may affect oil prices?
BERLINER: Well, yesterday, the price of crude topped $70 a barrel. That was its highest level since 2014, and that was...
KELLY: Yesterday - so meaning we didn't have this announcement yet, but everybody was anticipating...
BERLINER: Yeah. Everybody was anticipating.
BERLINER: That was when word was getting out. Today, actually, the prices have leveled off a little bit.
KELLY: And then what about supply? I mean, once the Trump administration reinstates sanctions - the big takeaway from today - when sanctions kick in again on Iran, what might that do to oil supplies?
BERLINER: Well, first, we don't know exactly how these sanctions are going to play out. But the U.S. could punish or threaten any country that ignores the U.S. sanction, and it doesn't - and doesn't curb its oil imports from Iran. It could do that diplomatically. It could do that by punishing the banks from those countries, cutting off some of their access to the U.S. financial system. But here's something to keep in mind. Oil supplies - they're fairly tight right now, and that's one of the factors that's been pushing up prices. You know, a few years ago, there was this huge glut of oil.
BERLINER: All the big oil producers, including the U.S. - they were pumping a lot of crude. And the price of oil got dirt cheap. It fell to around $27 a barrel. Now that glut is being absorbed. There's more demand. Economies around the world are improving. And if sanctions take some of Iran's oil off global markets, we could see even tighter supplies and higher prices.
KELLY: OK, so you're describing forces that were already in motion. We watch and wait and see how today's decision on the Iran deal may impact those forces - but back to this central question of Iran. I just described it as a major oil producer. How major, Uri? Where do they rank?
BERLINER: Well, it's major. Iran was the world's fifth-largest oil producer last year, accounting for about 5 percent of total output. So it's significant, but it's not one of the oil giants. So are there - there are definitely factors beyond Iran that have been affecting the price of oil. You know, as I mentioned, there was this oil glut back in 2016. And in December of that year, Russia and Saudi Arabia and a number of other countries - they joined hands to limit production. They agreed to sell less oil into the global market. And surprisingly, that's worked 'cause those kinds of deals usually fall apart because of cheating.
KELLY: Cheating meaning what?
BERLINER: Cheating. The goal of these joint deals is to increase prices by limiting production. That takes time, and a lot of oil producing countries - they're pretty weak economically, so they need cash right away. So they go ahead. They keep producing and selling as much as they can. They cheat, and the deal falls apart. But this time, it worked largely because Saudi Arabia and Russia, two of the world's largest oil giants - they've stuck together and kept their promise to cut output.
KELLY: All right, let me bring this right back home, right back to - I'm going to be driving home tonight trying to fill up my car at the gas station. Everything you're telling me suggests that the price that I will be paying to fill up my car - that we're all going to be paying to fill up our cars - that's going to sneak up, right?
BERLINER: Yeah. You may not love it. The average price of a gallon of regular now is $2.81. That's up nearly 20 percent over the last year. In some parts of the country, especially on the West Coast, the price is well above $3. And gas prices normally get a bit higher in the summer when people start driving more - head off on vacation. So if gas prices go a lot higher, that could crimp consumer spending and have an impact on the broader economy.
KELLY: All right, NPR business editor Uri Berliner - Uri, thank you.
BERLINER: Thank you, Mary Louise.
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