Oil has fallen in recent weeks, as the unexpected news that the U.S. would temporarily allow continued purchases of Iranian oil alleviated concerns that the lack of Iranian supply would push up prices. A ban was supposed to start November 4th, but the U.S. granted 8 countries 180 additional days to purchase Iranian oil. These countries had been halting their purchases of Iranian oil, buying from other sources, and helping push up oil prices.

Despite the six month extension, oil supply remains tight and oil prices may very well go higher rather than lower. Venezuelan exports continue to drop – with oil exports to the U.S. falling 19% in October and the outlook going forward looking very grim. While Saudi Arabia and Russia could increase production to make up for the eventual drop in Iranian exports, they plan to meet in December to discuss cutting production further. After six months, Iranian exports will fall as the extension expires. In the meantime though, U.S. consumers should benefit from lower than expected gas prices, which could be a nice bonus for holiday shoppers.