The weekend’s air strikes in Iran sent the price of crude oil surging as much as 9% and could soon add as much as 30 cents to the price of a gallon of regular gas and push up the cost of groceries and other consumer goods that are transported on the ground.
Experts say U.S. consumers — and in Connecticut — will be spared long lines at the pumps because there is a good domestic supply. However, those supplies — and the fact that the United States imports little oil or gas from the Middle East — won’t insulate consumers from higher gas prices.
Matt McClain, a petroleum analyst at GasBuddy, said the United States looks to its own oil production and chiefly imports from Canada and Mexico. But the price of crude oil — from which gasoline and diesel fuels are refined — is set in global trading. As a result, the military action in Iran and accompanying disruptions in shipping in the region affect oil prices worldwide.
“That is the unfortunate aspect here,” McClain said.
GasBuddy forecasts between a 10 cents and a 30 cent increase just from the military intervention this past weekend. Not factored in are what may happen in the next four to five weeks, the latest expected timeline for a military campaign expected by President Donald Trump.
“It very much depends on how long the war will continue and the shipping of oil is disrupted,” Mohammad N. Elahee, professor of international business at Quinnipiac University in Hamden, said. “If it goes away like last year, it was pretty quick. But if it continues — like what we saw just this morning — we know the war has crept into Lebanon.”
“And some of the countries that were in the past considered relatively safe — like the UAE, Bahrain — they have also been attacked,” Elahee said. “They are all major exporters.”
As of Monday, the average price of a gallon of regular gas was $2.92, compared with $2.905 a week earlier, according to AAA. Nationally, AAA reported, the average price per gallon was roughly $3 on Monday, compared with $2.94 a week ago.
AAA already had been warning consumers that gas prices were set for their seasonal shift upward from winter blend to the more expensive to produce summer blend. Any fallout from the events in Iran and a widening regional conflict in the Middle East would come on top of that.
AAA did not make a forecast on the effects of the recent military action in Iran.
“We know that prices would start to rise this time of year,” Tracy Noble, an AAA spokeswoman said. “Could we see those rise even further because of recent events? That possibility strongly exists.”
Denton Cinquegrana, chief oil analyst at Oil Price Information Service, said he also is keeping a close eye on the price diesel fuel, essential to power the tractor trailers and other vehicles that transport groceries and other retail goods.
As of Monday, diesel fuel nationally averaged $3.79, Cinquegrana said.
“I wouldn’t be surprised to see the national average get up over $4 a gallon in the next week or two,” Cinquegrana said. “I don’t think you’re going to see it happen all at once, but you are going to see prices continue to move higher.”
As those diesel costs rise, Cinquegrana sees potential for fuel surcharges on consumer goods to absorb the sudden increase in fuel costs.
“You’re going to get higher prices at the grocery store or whether it’s stuff at Target or Home Depot or whatever — anything that moves by truck — you’re going to see a higher fuel surcharge by the delivering companies or the manufacturers,” Cinquegrana said.
“Obviously, that’s going to hit people in the wallet, especially at a time when affordability is such a big issue.” Cinquegrana said.
The price of home heating oil typically mirrors the movements of diesel fuel. Home heating oil also may get more expensive but experts said the heating season in the Northeast is nearing an end. Some meteorologists have said March may still bring a blast of cold weather.
The price of Brent crude — the international benchmark — soared $6.63 a barrel, or 9%, to $79.50, its highest price in more than a year, according to Yahoo Finance. West Texas Intermediate crude — the U.S. benchmark for domestic oil — jumped 6.2% Monday to $71.19 a barrel, Yahoo Finance reported, citing data from FactSet.
Surging oil prices are being propelled upward by a standstill in traffic through the Strait of Hormuz off Iran’s southern coast. Analysts say the strait carries 20% of the world’s global oil shipping.
Oil prices could climb far higher, analysts said, if shipping comes to a halt for a prolonged time period. Already, at least one shipping company has suspended vessel crossings on the strait and a major maritime insurer is canceling policies that covered war risks, according to multiple news reports.
Kenneth R. Gosselin can be reached at [email protected]