Impact of Israel-Iran Tensions on Global Gas Prices

When it comes to gasoline prices, Israel's attack on Iran has brought an unsettling chill to the summer driving season. So far, the prices have been low and steady, offering some relief from inflation and tariff worries. But the skies remain darkened by Iran's vow to retaliate, threatening to send these low prices skyward.

As it stands, gas prices have typically risen moderately during the summer as people embark on vacations. However, the recent tensions between Israel and Iran have disrupted this usual pattern. Crude oil prices surged an impressive 12% in just a week, with the threat of a wider conflict looming.

"We're still at the tip of this situation, but Iran calling the strikes a declaration of war doesn't bode well for the flow of oil," said Patrick De Haan, vice president of petroleum analysis at GasBuddy, a fuel tracking platform.

De Haan predicts that, in the coming weeks, the national average for gas will climb by 10 to 25 cents per gallon. As of now, the average stands at a relatively affordable $3.13 per gallon. But this increase in crude prices could send the pump prices soaring.

The specter of Iran disrupting the critical oil flow through the Strait of Hormuz - a narrow waterway separating the Persian Gulf from global oceans - looms large. Iran has threatened to do just that in the past, prompting fears of a significant supply shock. About 21 million barrels of oil flows through the Strait of Hormuz every day, making it one of the most critical oil chokepoints on the planet.

If Iran disrupted the Strait, the oil prices could spike dramatically, causing a significant supply shock. Goldman Sachs estimates that if there's an "extended disruption," oil prices could breach $100 per barrel, as such a situation would prevent core OPEC producers from increasing output. However, Goldman Sachs considers such a disruption "much less likely."

Still, if oil prices continue to climb, there are several potential solutions to ensure supply meets demand. For instance, Saudi Arabia and other OPEC nations could accelerate their recent production increases. Additionally, the US, along with other major oil consumers, could release emergency oil stockpiles, much like they did in 2022 when Russia invaded Ukraine.

But one thing is certain: the Iran-Israel conflict has sent ripples through the global oil market, and the impact on gasoline prices is yet to be fully felt. Stay tuned for more updates as this situation unfolds.

The escalating tension between Iran and Israel has cast a shadow over the sports of summer driving, as the looming threat of a conflict might cause gas prices to surge. If Iran disrupts the oil flow through the Strait of Hormuz, it could lead to a significant supply shock and potentially send pump prices soaring beyond current averages.