U.S. oil prices already jumped last week, which could cause prices at the pump to rise about 20 cents a gallon in the coming weeks, according to one estimate.
American consumers are likely to start feeling the impact of the escalating conflict between Israel and Iran, as more expensive oil causes prices at the gas pump to rise.
U.S. oil prices jumped 12 percent from Tuesday to Friday, to $72.98 a barrel, and energy prices may climb higher after Israel struck several Iranian oil and gas facilities over the weekend. Those included one of the world’s largest natural gas fields, known as South Pars; Tehran’s main gas depot; and an oil refinery.
Last week’s increase in oil prices could cause gasoline prices to rise about 20 cents a gallon in the coming weeks, according to ClearView Energy Partners, a Washington research firm.
Oil and fuels like gasoline and diesel had been relatively cheap leading up to Israel’s strikes on Iran last week, which could cushion the blow to consumers. A gallon of regular gasoline costs $3.14 on average, down from $3.45 this time last year, according to the AAA motor club.
How Iran responds to Israel’s latest strikes will have a big effect on oil prices. The country is a large oil producer and its position on the northern side of the Strait of Hormuz, a major thoroughfare for oil and liquefied natural gas, or L.N.G., means that it could severely disrupt global energy markets.
Price of Oil
If Iran were to close the waterway connecting the Persian Gulf to the Gulf of Oman for even a short time, oil prices could rise anywhere from $8 to $31 a barrel, according to ClearView Energy Partners.
“Escalation of the conflict presents many supply risks, but — at peril of stating the obvious — the greatest is probably an Iranian closure of the Strait of Hormuz to maritime energy cargoes,” the firm’s analysts wrote on Saturday.
Iran has an economic incentive to allow tankers to continue passing through the strait, as it ships oil through that channel, much of it to China.
And although the United States has been buying less and less oil from the Persian Gulf, the commodity is traded globally, leaving consumers and businesses exposed to price increases. Should U.S. oil companies respond to higher prices by drilling more, it would still take many months for that oil to start flowing.
Farnaz Fassihi contributed reporting.