For the third consecutive week, US oil prices are in the spotlight as the American and Israeli military campaign against Iran continues to escalate. Gasoline prices are forecast to reach $3.85 per gallon by analyst Patrick De Haan, who also flagged the possibility of $4 pump prices in the near term. The conflict has become the defining force behind a sharp and sustained rise in energy costs across the United States.
Prior to the outbreak of hostilities on February 28, Americans were paying less than $3 per gallon for regular gasoline. That figure has since climbed 23% to $3.70, a rise driven entirely by the geopolitical disruptions caused by the US-Israel campaign against Iran. Economists have noted that the speed and magnitude of the increase is unusual even by the standards of previous oil price shocks.
The targeting of Kharg Island by US forces on Friday was seen as a particularly significant escalation, given that the facility plays a central role in Iranian oil exports. Iran’s blockade of the Strait of Hormuz, through which around 20% of global oil typically moves, has compounded the supply crisis. Brent crude, the global standard, traded between $103 and $106 per barrel Monday, while US crude hovered near $94.
The effects at the consumer level have been especially severe in California, where prices have surpassed $5 per gallon and some Los Angeles gas stations are posting prices above $8. Diesel prices, which affect the cost of transporting most consumer goods, could climb to $5.05 to $5.15 per gallon. Oil industry leaders including Exxon’s CEO Darren Woods, along with counterparts at Conoco and Chevron, have personally briefed White House officials on the worsening supply outlook.
US equity markets responded positively to a temporary dip in oil prices Monday morning, with the S&P 500 gaining roughly 1%. Yet analysts caution that the improvement may be fleeting given the unresolved military standoff. Oil company stocks have reached all-time highs overall since the conflict began, a trend that underscores the growing economic divide between energy producers and everyday American consumers.