Oil and gas prices are rising following U.S. and Israeli military strikes on Iran.
A barrel of benchmark U.S. crude rose 6.3% to settle at $71.23 per barrel Monday. Brent crude, the international standard, climbed 6.7% to settle at $77.74 per barrel. Wholesale gasoline was up 10 cents per gallon by the end of the trading day.
“We are going to see gas prices increasing some 10 to 30 cents per gallon starting as early as later today and probably in full effect by no later than Wednesday," GasBuddy analyst Matt McClain told Spectrum News. "That analysis is simply based on what has already transpired over the weekend in a volatile situation" and does not take into account President Donald Trump's announcement on Monday that U.S. military strikes in Iran are likely to last four or five weeks and could go far longer than that.
Gas prices were already rising ahead of the summer driving season as people travel more. The national average price of gasoline is now $2.997 per gallon, according to AAA — up from $2.984 on Sunday and $2.875 a month ago.
About 20% of the world's oil supply travels through the Strait of Hormuz at the southern end of the Persian Gulf. Tanker traffic dropped sharply amid disruption of satellite navigation systems, data and analytics firm Kpler said on X, while the U.K. Maritime Trade Operations Centre reported attacks on several vessels in the area on either side of the strait and warned of elevated electronic interference to systems that show where ships are.
On Monday, U.S. oil was trading 8% higher at $72.40 per barrel, while international standard Brent was up 8.8% at $79.30 per barrel, as disruptions to tanker traffic through the Strait of Hormuz chokepoint raised uncertainty about how the U.S. and Israeli attacks on Iran would affect supply to the world economy.
Higher oil prices raise the prospect of costlier gasoline for U.S. drivers as well as increased prices for other goods at a time when people in many countries have been stung by inflation.
Supply, however, will not be an issue in the United States, McClain said, because the country's gasoline is derived from crude oil supplied by Canada, the U.S. and Mexico, which is not disrupted.
"We're not going to run out of gas. That's not a problem. But we are going to see the prices increase because any time you have such a major upset in a situation like this, it creates volatility," McClain said. "Markets hate volatility."
The U.S. feels the effects of oversees volatility because crude oil is traded in U.S. dollars, he added.
The price of crude is the single largest factor in how much U.S. motorists pay for fuel at the pump — a highly political issue ahead of midterm congressional elections. And higher oil prices are usually felt at the pump within a couple of weeks at most.
Torbjorn Soltvedt, principal Middle East analyst at risk intelligence company Verisk Maplecroft, said Iran's goal is to raise the economic costs of the conflict for Gulf states like Saudi Arabia and the United Arab Emirates, hoping that these countries will pressure the U.S. and Israel to deescalate.
He said that the coming days and weeks will be marked by uncertainty and volatility in global markets, with oil prices likely to push past $80 per barrel.
“If we start to see additional direct attacks against energy infrastructure, not just in Saudi Arabia and Kuwait, but in other countries in the region, then that’s when the market will start to think about a push toward $90 and perhaps even beyond.”
The Associated Press contributed to this report.