- Most analysts predict that gas prices are set to rise today as a new war in the Middle East restricts supply.
A stretch of low gas prices is likely to end soon, analysts warn, as a new war in the Middle East starts to restrict global trade in the oil we refine into gasoline.
CNN reports, “Oil futures surged Monday after the United States and Israel launched strikes against Iran over the weekend, with the conflict spilling over into the wider Middle East region.”
Drivers paid an average of $2.99 for a gallon of regular last week, AAA reports, with a high of $4.66 in California and a low of $2.55 in Mississippi.
That would likely rise soon even without a new war. AAA notes that a seasonal rise in gas prices often begins this time of year as refineries switch to producing summer blend gasoline, “which contains pricier additives to help reduce evaporation during warmer months.”
But the war has closed the Strait of Hormuz, a strategic shipping corridor out of the Persian Gulf, to ship traffic.
The New York Times explains, “About one-fifth of the world’s oil and a significant amount of natural gas usually pass through the choke point daily.”
The price of a barrel of Brent Crude is up just over 6% at publication time, reaching $76.77. But Bloomberg reports that analysts from both JPMorgan and Citi have projected that a high-end price of $120 is possible. The NYT adds, “The magnitude of those price increases and how long they last will depend on what the United States and Israel do next — and how Iran responds.”
Gas Prices Change After Oil Prices Change
- The oil market has reacted quickly, but pump prices move a little more slowly.
Gas prices do not change as quickly as oil prices. Patrick de Haan, Vice President of Petroleum Analysis with GasBuddy, explains, “Most states will likely see gas prices begin to rise at some point today or tomorrow.
But that increase will be “measured in pennies or maybe a nickel or dime at first.” By the end of the week, he says the average station will see an increase of 10-30 cents per gallon, while the priciest markets could see an increase of “potentially 30-85 cents per gallon.”
Diesel prices, he says, respond more quickly to market shocks.
“Truckers and diesel consumers will likely see fairly swift increases that may be measured in dimes per day this week as stations pass along the rise in price. Average diesel prices could rise 20-35c/gal this week.”
