US oil prices are heading into a stormy Monday as the Iran war moves through its third week with no resolution in sight, and petroleum analyst Patrick De Haan has forecast pump prices of $3.80 to $3.85 per gallon. The prospect of $4 gasoline looms in the background, with De Haan noting that it remains possible. The sustained military campaign has turned what began as a geopolitical conflict into a major domestic economic story.
Before hostilities commenced on February 28, Americans were purchasing regular gasoline for under $3 per gallon. The conflict’s impact on oil infrastructure and key shipping routes has since pushed the national average 23% higher to $3.70. Consumer spending power is being visibly eroded by the conflict’s collateral impact on everyday transportation costs.
A US strike on Kharg Island last Friday targeted the core of Iran’s oil export processing infrastructure, adding further strain to global supply. Iran continues to hold the Strait of Hormuz hostage, blocking the route through which around one in five barrels of the world’s oil typically travel. Brent crude traded between $103 and $106 per barrel Monday, while US crude recovered to $94 after nearly touching $100 the previous day.
The geographic disparity in price impacts is notable: California averages more than $5 per gallon, and some Los Angeles stations are pricing above $8. National diesel prices for commercial transport could climb to $5.05 to $5.15 per gallon. The White House has received direct briefings from Exxon CEO Darren Woods, as well as from the heads of Conoco and Chevron, all raising urgent concerns about supply deterioration and speculative market behavior.
Stock markets showed modest improvement Monday, with the S&P 500 gaining around 1% as oil prices momentarily retreated. The gains in equity markets stand in sharp contrast to the financial stress experienced by American households facing rising fuel costs. With oil companies hitting record stock prices and consumers paying record pump prices, the economic divide created by the crisis is growing sharper by the day.