The conflict between Israel and Iran is now four days old. As the two nations target each other's oil refining infrastructure, ripple effects may be felt here in the U.S. in the form of rising gas prices.
“The national average will probably rise somewhere in the ballpark of maybe five, to as much as 10 cents over the next two weeks,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “And then we should start to see some relief ahead of July 4th, as long this situation does start to improve.”
Oil prices fell slightly Monday after surging more than 7% last Friday.
“Oil prices were up about 5% 12 hours ago on Sunday night, but because Iran does not really have a whole lot of good options, prices eventually have been tapering off,” said De Haan.
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Iran is one of the largest oil suppliers in the world. The United States, however, doesn't rely on Iran for its oil, importing instead from countries like Canada, Mexico, and Saudi Arabia.
But Dr. Ramanan Krishnamoorti, Vice President for Energy and Innovation at the University of Houston, says where a country gets its oil from does not determine the price.
“Oil is a global commodity. It is moved around the world, from every part of the world, to every part. And so, oil prices are determined by global markets,” explained Krishnamoorti. “We are 10,000 miles away from this conflict, and yet, those prices, those global prices, have an impact on what we do in the United States.”
Experts are also keeping a close eye on the Strait of Hormuz, which runs between Oman and Iran. According to Dr. Krishnamoorti, it is responsible for moving 20% of the world's oil.
A December 2023 report by the International Energy Agency stated that even a short-lived disruption to the Strait of Hormuz could have a significant impact on oil markets.
“Everything has to pass through this very narrow strait, one side of which is controlled by Iran,” said Krishnamoorti. “And therefore, really any action there can really cut off that supply.”
But as of now, experts don’t see this conflict causing record high prices at the pump.
“This is probably going to be a relatively low impact event,” said De Haan.
