Americans can expect prices at the gas pump to increase in the aftermath of the United States and Israel’s surprise attacks on Iran over the weekend, though the price hikes won’t be too drastic — yet.
The U.S. and Israel carried out strikes on Iran early Saturday morning, killing Supreme Leader Ali Khamenei. The attacks sent crude oil prices soaring Monday morning, as the Islamic Revolutionary Guard Corps moved to close one of the most important chokepoints for global oil trade, the Strait of Hormuz.
Crude oil is the largest component of the retail price of gasoline, accounting for around 50%, making it one of the primary drivers of gasoline price movements.
As the conflict in Iran has sent domestic and international benchmarks for crude oil above $70 per barrel, rising gas prices aren’t far behind. The national average price of gasoline was $2.997 per gallon Monday morning, up by nearly $0.02 from yesterday and $0.06 from one week ago, according to AAA.
This isn’t a dramatic change over the last few days, and analysts have predicted that any additional price jumps will be seen in cents rather than dollars.
GasBuddy analyst Patrick De Haan has estimated that over the next week, gas stations could see average increases of $0.10 to $0.30 per gallon, with a few select stations seeing jumps of $0.30 to $0.85 per gallon.
Most states, he warned, will start seeing price hikes on Monday or Tuesday.
De Haan also noted that increased prices at the pump won’t just be caused by the conflict in Iran. He explained that the market is already in the middle of a transition to summer gasoline blends, which cost more to produce and have higher seasonal demand. Plus, he said the U.S. is currently in an early phase of the refineries’ expected maintenance season, which will limit production.
Those factors were already expected to put upward pressure on prices; geopolitical tensions and conflict “simply accelerates the move,” De Haan said.
The warnings come just days after President Donald Trump championed low gas prices as a major win for his administration during his State of the Union address last week. Trump promised to bring gas prices down during his campaign and has successfully done so over the last year.
Global oil markets were on track Monday to see the largest daily gain in years.
Just before 1 p.m. EST, Brent Crude was up by more than 6%, trading at around $77.46 per barrel. Similarly, West Texas Intermediate has risen 5.86%, and was priced at $70.95 per barrel.
Analysts have warned that if global oil transport through the Strait of Hormuz is effectively blocked for more than three to four days, oil and, by extension, gas prices will shoot up dramatically.
“Eighty percent of the [gasoline] price in the United States is due to the crude price,” Rystad Energy chief economist Claudio Galimberti told the Washington Examiner.
Galimberti warned that if crude oil prices jump by 20% to 30%, gasoline prices could rise by around 10%.
“You can expect gasoline prices to be much higher if these Brent prices are confirmed at this level,” he said.
OIL AND GAS PRICES SOAR AFTER IRAN STRIKES
Roughly 20 million barrels of crude oil and other oil products pass through the strait daily, equivalent to 20% of global oil demand.
Since Saturday’s strike, several large vessels estimated to be transporting more than 10 billion barrels of oil have turned around before passing through the strait, according to an analysis of shipping data by Sky News.
