Tensions over Iran and the sanctions against the country are the main reasons for surgingoil prices, Cambridge Energy Research Associates Chairman Dan Yergin told CNBC Friday.
The sanctions are set to take effect this summer and are expected to reduce the flow of Iranian oil into the world market. While they are anticipated, Yergin, also a CNBC energy analyst, told Larry Kudlow they are not fully priced into the oil market.
“The sanctions won’t be in a vacuum because it will come along with increased tensions with Iran over its nuclear program,” he said. “So I think what’s in the price now is only part-way there.”
In other words, once the sanctions go into effect, he expects oil prices to rise further.
While people may be looking at Iraq, Angola, and Libya to help replace the Iranian barrels in the market, Yergin said don’t count out the United States.
“Our production this year is up 20 percent since 2008,” he said. “It might be up another 300,000 barrels this year.”
Gas is already nearing $4 a gallon nationwide. As prices rise, Yergin expects there be calls to tap the Strategic Petroleum Reserve. However, he urges caution.
“It’s there to deal with a real disruption, and when you are looking at the problems with Iran, it’s not something that you want to rush in and use,” he said.
"The Kudlow Report" airs weeknights at 7 p.m. ET.
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