Oil prices have surged well above $90 per 42-gallon barrel this week as the United States has attacked Iranian military installations in and around the key Strait of Hormuz, and Iran has responded in kind.
The prices are the highest for global benchmarks since July, and the violence has already pushed retail gasoline prices higher at U.S. gas pumps ahead of the Labor Day weekend, the last big holiday before the summer vacation season ends.
Light sweet crude, the U.S. benchmark, was trading at $91 a barrel at midday ET on Sept. 2, according to Oilprice.com. Brent crude, the global benchmark, was quoted at $95.82 a barrel.
GasBuddy.com had its U.S. national average price at $4.106 a gallon on Sept. 2. AAA Fuel Prices put its price at $4.12. U.S. gasoline prices averaged $4.07 a gallon in August, AAA data show, the highest average price for an August.
Both GasBuddy and AAA have reported that their average U.S. prices have stayed above $4 a gallon from July 21 onward. Prices had fallen to as low as $3.71 for GasBuddy and $3.79 for AAA in early July.
The war continues to stress markets
The Persian Gulf war between the United States, Israel and Iran won’t go away.
After a lull in the middle of the summer, the United States launched attacks against Iran starting over the weekend. The U.S. Central Command said the strikes followed “recent attempted attacks” by the Islamic Revolutionary Guard Corps (IRGC) against American forces and commercial shipping in the Strait of Hormuz, the BBC reported.
The strait is a crucial waterway because around 20% of global oil and gas shipments usually pass through it.
The turmoil has trimmed a relief rally in U.S. stocks on Sept. 2. The Dow Jones industrial average was up as many as 461 points in early trading, in part because oil prices had moved lower.
The gain has fallen back to 250 points to just above 53,000 in part because of the Persian Gulf tensions. In addition, the U.S. Energy Information Administration’s weekly report on oil stocks showed smaller stocks than expected on hand for the week of Aug. 28.
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The report mirrored findings in another report from the American Petroleum Institute.
Oil stocks globally have been trimmed because of the war.
A second problem has been Ukraine attacks on Russian refineries and pipelines, Patrick De Haan, GasBuddy’s head of petroleum analysis, wrote this week . The attacks have forced Russia to import oil to meet its own domestic needs. Normally, Russia is one of the world’s largest exporters of oil and oil products.