Here's Why the Price Of Oil Is Dropping

For the first time since early April, the price of oil fell to $51 per barrel on Tuesday—a sign of renewed anxiety in the market after the deadline for nuclear talks with Iran were extended this week. Still, that's good news for consumers, and if sources close to the negotiations are to be trusted, there might be even more good news on the horizon. 

If an Iran nuclear deal goes forward, "the national average gas price could return to nearly $2 a gallon later this year," CNN's Matt Egan reports. "The national average is currently sitting at $2.77."

The reason that market analysts appear eager for a nuclear deal resolution is because Iran, the country at the center of ongoing international debate regarding its refinement of nuclear materials, controls the fourth largest oil reserves in the world. Should the Middle Eastern country agree to the terms laid out by the West, the prospects of economic sanctions lifting would presumably increase oil exports and lead to lower fuel costs overall.

The Wall Street Journal's Benoit Faucon and Summer Said recently wrote that "Iran wants to double oil exports to 2.3 million barrels a day if a deal is reached and sanctions are lifted."

But Iran is not the only factor to consider with respect to the seven-percent dip. As Reuters explains: "The fall in oil prices is explained by a combination of factors, such as uncertainty in the eurozone after the vote in Greece, expectations of rising U.S. oil production, the looming closure of the Iran nuclear deal, and decreasing demand for exported oil in China."

Oil production in the U.S. rose for the first time in more than seven months; and the number of rigs operating in the country increased by 12 last week, putting the total number at 640 domestically. It remains to be seen what the long-term effect of tumbling oil prices will be—but for consumers at least, this comes as welcomed news as many prepare to fill up their gas tanks and head out on road trips this summer.