With the US-Israel campaign against Iran now in its third week, US oil prices are heading for yet another session of steep volatility, and analysts say $3.85 per gallon could be the reality by Monday. Petroleum analyst Patrick De Haan has issued a cautious but stark forecast, noting that while $4 per gallon is not certain, it is far from impossible. The continuing military campaign has made stable energy prices an elusive goal.
When the conflict began on February 28, American drivers were paying just under $3 per gallon for regular gasoline. Since then, a 23% price increase has lifted the national average to $3.70, as oil markets respond to each new military development with fresh volatility. Consumer groups have raised alarms about the growing financial burden being placed on working Americans.
Last Friday’s US strikes on Kharg Island, Iran’s primary oil processing center, sent shockwaves through commodity markets. Iran has answered with a continued blockade of the Strait of Hormuz, keeping roughly 20% of the world’s oil out of reach for international buyers. Brent crude fluctuated between $103 and $106 per barrel Monday, while US crude traded around $94 after touching $100 on Sunday.
American drivers in California are experiencing pump prices of over $5 per gallon on average, with some Los Angeles stations exceeding $8. Diesel prices used for freight transport could soar to $5.05 to $5.15 per gallon nationally. The CEOs of Exxon, Chevron, and ConocoPhillips have all engaged directly with the White House to warn of deteriorating supply conditions, with Exxon’s Darren Woods specifically pointing to the inflationary danger posed by speculative investors.
A brief dip in oil prices offered Wall Street some relief Monday morning, with the S&P 500 rising about 1% from its open. That optimism may be fragile, however, as the military conflict that triggered the price crisis remains unresolved. Shares of major oil producers have climbed to record highs since the war began, a bitter reminder of how energy sector gains come at the expense of millions of American consumers.
