A fifth of the world’s oil is currently blocked from global markets due to Iran’s Strait of Hormuz blockade, and US oil prices are bracing for another round of intense volatility on Monday. Analyst Patrick De Haan has projected that gasoline could reach $3.80 to $3.85 per gallon, with $4 remaining a near-term possibility. Three weeks into the US-Israel campaign against Iran, the energy market shows no signs of settling.
When the first US-Israel strikes hit Iran on February 28, the national gasoline average was below $3 per gallon. Since then it has climbed 23% to $3.70, a rapid escalation driven by the conflict’s progressive targeting of oil infrastructure and shipping lanes. This price surge represents one of the fastest peacetime increases in US fuel costs in recent memory.
US forces struck Kharg Island on Friday, a facility at the heart of Iran’s petroleum export operations, significantly tightening already stressed global supply. Iran’s retaliatory Strait of Hormuz blockade has denied the world access to the shipping lane that ordinarily handles 20% of global oil. Brent crude fluctuated between $103 and $106 on Monday, and US crude hovered near $94 after briefly rising to $100 the day before.
American consumers in California are facing the most extreme version of the crisis, with averages above $5 per gallon and Los Angeles stations posting prices of over $8. Nationwide, diesel prices for freight and transportation sectors could reach $5.05 to $5.15. Exxon’s chief executive Darren Woods has personally warned White House officials of the potential for further price surges driven by supply shortfalls and speculative activity, while leaders from Conoco and Chevron have echoed similar concerns.
US equities began Monday on a positive note, with the S&P 500 rising about 1% after oil prices temporarily retreated. However, market analysts caution that the improvement could be short-lived as the war continues. Oil company stocks have reached record highs overall since the conflict began, benefiting from the same price environment that is straining the finances of ordinary American families.