(Bloomberg) — Escalating Iran-U.S. tensions raise the prospect of a spike in gasoline prices, though the effects so far have been minimal.
Gasoline prices have held steady in the U.S. following the Thursday killing of Iranian General Qassem Soleimani and Iran’s threats of retaliation that could include attacks designed to disrupt the flow of crude oil. However, oil and gasoline prices could surge if hostilities escalate.
“So far, what we’ve seen in oil — which is about a $1-per-barrel increase from a week ago — is not too unsurprising,” Patrick DeHaan, senior petroleum analyst at retail fuel price tracker GasBuddy, said by phone. “But more of the impact could be after Iran retaliates, which they’ve certainly all but promised to the U.S. at this point.”
Even so, motorists may see a “slight uptick” in gasoline prices over the next seven to 12 days, DeHaan predicted.
Auto club AAA reported a nationwide average of $2.58 per gallon on Monday. Gasoline futures also show little change, with the NYMEX RBOB contract for February delivery up just 0.38% at $1.75 per gallon.
Oil futures rose as much as 3.1% on Monday. futures climbed to as high as $70.74 a barrel on ICE (NYSE:) Futures Europe after a 3.6% surge Friday. West Texas Intermediate for February delivery climbed as much as 2.65% and were at $63.16 on the New York Mercantile Exchange as of 12:21 p.m.
Ample domestic supply and slowing economic growth ensure any increase in oil prices isn’t expected to last long, said Jim Lucier, managing director of research firm Capital Alpha Partners.
A surge in oil production has helped insulate the country from supply disruptions overseas.
“Before the U.S. energy revolution took off, American consumers were generally vulnerable to price shocks due to instability in the Middle East,” said Dean Foreman, chief economist at the American Petroleum Institute. “However, the rise of U.S. energy leadership has helped to reduce market volatility by about half since 2014. Consequently, recent geopolitical events have had relatively small effects on energy prices and provide a consistent reminder of how vital it is to have a strong domestic U.S. oil and industry.”
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