Americans are starting to notice a small uptick in gas prices, attributed to the escalating conflict with Iran, according to analysts.
Andrew Lipow, who heads Lipow Oil Associates, mentioned that while the increase in gasoline prices is expected, it will only be a few cents. “We anticipate gasoline prices to rise about 3-5 cents per gallon over the next few weeks,” he observed.
He also noted that crude oil prices initially soared by 5% but have since dropped, leading to a negative market outlook.
On Monday, oil prices fell with the US benchmark WTI crude at around $69 per barrel, down from a peak of $75 just days earlier. This followed a US strike on Iran’s nuclear facility, further complicating tensions in the region.
Gas prices averaged $3.22 per gallon on Monday, a rise from $3.14 the previous week.
Austin Lynn, a principal analyst for Wood Mackenzie, asserted that while fuel prices are higher, they’re not solely a result of the ongoing conflict. He expressed skepticism about further significant increases, saying, “There’s a solid argument that we can see higher pricing compared to Q3 over expectations from a month ago.” However, he suggested that major fluctuations are unlikely at this time.
Vincent Piazza, a senior energy analyst at Bloomberg Intelligence, downplayed the potential for drastic changes in prices as summer approaches, stating, “There’s no reason to panic right now,” and he highlighted the absence of new disruptions in oil and gas from the Middle East.
Piazza emphasized the importance of monitoring supply flows and production capacity globally, explaining that the oil market operates on a worldwide scale, meaning global events can impact local prices.
While Iran is a significant oil producer, US sanctions limit its ability to sell oil to the US and many others, though it continues to export to China.
The situation presently does not seem to have severe effects beyond the initial price spike, yet future developments could alter that. “The market seems to be applying pressure on Iran to keep the Strait of Hormuz open, especially considering that China has already bought over 90% of Iran’s oil exports,” Lipow said.
Lynn stated that he thinks Iran is unlikely to close the strait, calling it “political suicide,” which would affect both neighboring countries and key buyers.
He added that Iran’s economy largely depends on oil exports, hinting that closing the strait could backfire by diminishing relations with key partners like China.
Interestingly, the Trump administration seems sensitive to fluctuations in gas prices. Over the weekend, Secretary of State Marco Rubio urged China to encourage Iran to keep the shipping channel open, stating that they rely heavily on the Straits of Hormuz for oil.
Then, on Monday, President Trump tweeted a stark warning about the situation, saying, “I’m watching! You’re playing directly into the enemy’s hands. Don’t do that!”
