Gas prices could see a modest increase in the coming weeks following a 7% spike in oil prices on Friday, driven by the escalating conflict between Israel and Iran. However, analysts believe that any rise in gas prices is likely to be short-lived.
According to AAA data, the national average price of gasoline was $3.14 per gallon on Monday, up $0.02 from the previous week but $0.30 lower than a year ago. GasBuddy’s head of petroleum analysis, Patrick De Haan, noted that gas prices are still 10% below last summer’s levels, leaving room for prices to increase slightly over the next week or two.
On Monday, traders appeared to downplay the impact of the conflict, with Brent crude futures falling nearly 4% to around $71 per barrel and West Texas Intermediate futures trading at around $70 per barrel. A Wall Street Journal report suggested that Tehran may be open to returning to nuclear talks to deescalate the situation, potentially leading to a decrease in oil prices.
Andy Lipow, president of Lipow Oil Associates, predicted that gasoline prices could rise by about 10 cents per gallon in the coming weeks if the conflict subsides. Despite this temporary increase, analysts expect gas prices to eventually decline in the months ahead.
Tom Kloza, chief market analyst at Turner, Mason & Co., anticipates a significant drop in gasoline prices by the end of 2025. However, he acknowledged that prices may fluctuate in the near term before trending lower.
Wall Street analysts warned that oil prices could surge to $90 per barrel or higher if the conflict escalates or if key shipping routes, like the Strait of Hormuz, are disrupted. Lipow highlighted the potential for Iran to target tankers passing through the Strait of Hormuz, which could have a significant impact on oil prices.
OPEC+ has been increasing oil output leading up to the recent conflict between Israel and Iran. Year-to-date, oil prices have been negative, with WTI down over 3% and Brent declining approximately 5%.
Overall, while gas prices may see a temporary uptick, the consensus among analysts is that prices are likely to trend lower in the long run. The situation remains fluid, and market dynamics will continue to play a significant role in shaping future price trends.
