Oil and gas supplies could take months to return to normal after Iran deal, energy experts say

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Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. crude oil / krud ɔɪl / (n.) – oil that is still in its natural state, exactly as it comes out of the ground, before it is cleaned, changed, or turned into gasoline at a factory
    Example:

    A sudden drop in the supply of crude oil can quickly make gas prices go up.


  2. strand / strænd / (v.) – to leave someone or something in a place where they are stuck, trapped, or completely unable to move away
    Example:

    Several small fishing boats were stranded on the sandy beach because of the heavy storm.


  3. asset / ˈæs ɛt / (n.) – something valuable that belongs to a person or company
    Example:

    The company sold its assets to get money and pay its debts.


  4. slip / slɪp / (v.) – to drop or become lower in value, price, or amount
    Example:

    The ice cream shop’s income slipped a little bit during the cold months.


  5. refinery / rɪˈfaɪ nə ri / (n.) – a large factory where raw natural materials, like oil or sugar, are cleaned and changed into useful products, like gasoline or white sugar
    Example:

    Many people in the small town work at the nearby fuel refinery.


Article

Read the text below.

High oil and gasoline prices and energy supply problems won’t be solved overnight, despite an agreement to end the Iran war and open the Strait of Hormuz announced on June 14.


It will likely take months before energy companies can resume operations to the point of meeting the world’s demand, according to energy experts. The slow pace of the process of shipping and refining crude oil, and doubts about the security of traveling through the strait, mean the effect won’t be seen immediately, they said.


Ships loaded with crude oil have been stranded in the Persian Gulf for more than three months, unable to safely travel through the waterway, where about a fifth of the world’s oil and gasoline supplies typically traveled before the war began.


“It’s going to take time for people to feel comfortable and for insurance to be in place… particularly to get people on the ground to restart some of these assets,” said Daniel Evans, global head of fuels and refining research at S&P Global.


Still, oil prices slipped after the deal was announced. Brent crude, the international standard, was down $3.45 at $83.89 per barrel. U.S. benchmark crude oil lost $4.03 to $80.85 per barrel. Those prices are still well above the roughly $70 per barrel where oil was trading before the war started.


As the higher prices unwind, ships that have been stranded will have to exit the strait, and then new tankers will have to come in to be loaded, Evans said.


“To bring a ship in, you need to be confident that you’ve got a big enough window of safety to bring it in, load it, and move it out,” he added.


Oil tankers also move slowly, he explained. It takes months to travel from the Strait to distant countries, deliver the crude oil to a refinery for processing, and then arrive at their final destination.


In addition, some producers in the Middle East paused extracting oil from the ground, known as a shut-in, when they ran out of storage space. Restarting those operations can be a slow process.


This article was provided by The Associated Press.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • The article notes that oil prices slipped after the deal was announced, but those prices are still well above where they were before the war started. In your opinion, do you think companies drop their prices fast enough when a crisis ends? Why or why not? Discuss.
  • When big global supply problems are fixed, some local businesses still keep their prices high for consumers. What do you think should be done with companies that keep their prices high long after a crisis has been solved? Discuss.

Discussion B

  • Daniel Evans said it’s going to take time for people to feel comfortable and to get people on the ground to restart assets. Why do you think he said this? Discuss.
  • Restarting businesses and going back to work after a war, global crisis, or natural disaster can be a very slow and uncertain process. In your country, would you say that the government does its best to help people and businesses feel safe and comfortable again to go back to their normal routines after a major crisis? Why or why not? Discuss.