US oil prices are edging toward levels not seen in years as the Iran war extends into its third week and energy markets brace for more volatility on Monday. Petroleum analyst Patrick De Haan has forecast pump prices of $3.80 to $3.85 per gallon Monday, with $4 gasoline still a possibility depending on how events unfold. Three weeks of military conflict have created one of the most sustained oil price surges in recent American history.
The US-Israel campaign against Iran launched on February 28 has been the defining driver of US oil price increases over the past three weeks. From a pre-conflict average below $3 per gallon, the national gasoline price has surged 23% to $3.70, a remarkable increase achieved without a corresponding jump in domestic demand. The supply-side disruption caused by the conflict has been the sole engine of these price increases.
Friday’s US strike on Kharg Island, the central facility in Iran’s oil export infrastructure, intensified already serious global supply concerns. Iran’s blockade of the Strait of Hormuz, responsible for moving about one-fifth of the world’s daily oil supply, has further restricted available petroleum on world markets. Brent crude traded between $103 and $106 per barrel Monday, while US crude hovered near $94 following a brief rise to $100 the previous day.
The domestic price shock has been most visible in California, where averages have surpassed $5 per gallon and some Los Angeles stations are charging above $8. Diesel prices for freight and logistics could reach $5.05 to $5.15 per gallon nationwide. Senior oil industry leaders including Exxon’s Darren Woods and counterparts from Conoco and Chevron have briefed White House officials on the deepening crisis, warning that speculative market activity could magnify the impact of physical supply shortfalls.
Wall Street found modest footing Monday, with the S&P 500 climbing around 1% following a brief softening in crude prices. Major oil company stocks have surged to record levels since the conflict began, benefiting from the same elevated prices that are straining household budgets. Until the Strait of Hormuz reopens and military operations cease, US oil prices are likely to remain elevated and unpredictable.