US crude oil prices experienced significant volatility Monday morning, dipping to $94 per barrel after briefly reaching $100, as the conflict in Iran entered its third week. The fluctuations follow a period of sustained price increases triggered by escalating tensions and concerns over potential disruptions to oil supplies. Brent crude, the international benchmark, mirrored the trend, initially rising to $106 before falling back to $103.
The price swings approach after the US military conducted strikes on Kharg Island, Iran, on Friday, targeting more than 90 Iranian military sites, according to US Central Command. The strikes, confirmed by President Donald Trump, focused on military installations although deliberately avoiding damage to oil and gas infrastructure, a decision analysts say is aimed at preventing a further surge in global oil prices. A satellite image of Kharg Island, captured by the European Space Agency, shows the island’s critical oil export terminal.
Patrick De Haan, a leading petroleum analyst, predicted Monday that the average US cost of gasoline could reach $3.80 to $3.85 per gallon, with the possibility of $4 per gallon still on the table. Diesel prices could climb to between $5.05 and $5.15 per gallon nationwide. The average US gasoline price has already risen by 23% in under three weeks, from below $3 per gallon on February 28 to $3.70 currently, according to Consumer Reports.
Regional variations in gasoline prices are stark. California is already seeing averages exceeding $5 per gallon, with some Los Angeles gas stations charging over $8 per gallon. The price increases are occurring as Iran continues to block ships from traversing the Strait of Hormuz, a vital waterway for global oil transport, through which approximately 20% of the world’s oil supply passes.
Wall Street reacted to the fluctuating oil prices with initial gains Monday morning, with the S&P 500 up approximately 1% at 11am ET. Stocks in major oil companies experienced minor fluctuations, though shares have reached all-time highs overall since the start of the conflict. Executives from ExxonMobil, ConocoPhillips and Chevron reportedly warned White House officials about the potential for worsening conditions due to the disruption in the Strait of Hormuz.
ExxonMobil CEO Darren Woods cautioned officials that prices could continue to rise if You’ll see supply issues with refined oil and gas, and warned of the potential for speculative trading to further inflate prices. The Wall Street Journal reported that the other two CEOs voiced similar concerns about the broadening interruption to oil supplies.
Kharg Island, responsible for approximately 90% of Iran’s oil exports, remains a critical target. Experts have noted that bombing or capturing the site could cause a sustained increase in already surging oil prices, potentially pushing prices to $150 per barrel. Despite the US strikes, Iranian state media reported that exports from the island were continuing normally.
