US oil prices are responding to every development in the Iran conflict as the war enters its third week, creating a state of continuous market volatility that analysts say could persist for the foreseeable future. Petroleum analyst Patrick De Haan has forecast Monday pump prices of $3.80 to $3.85 per gallon, while $4 gasoline remains a near-term possibility. The responsiveness of oil prices to each new military development has made energy markets uniquely sensitive to the conflict’s progression.
The responsive relationship between the Iran conflict and US oil prices was established on February 28, when the first US-Israel strikes triggered an immediate market reaction and a sustained rise in the national average. From below $3 per gallon at the start of the conflict, prices have risen 23% to $3.70, with each successive military development producing a fresh price response. The war has effectively turned global oil prices into a real-time scorecard of the conflict’s intensity and duration.
Friday’s US strike on Kharg Island produced exactly the kind of immediate price response that has characterized the conflict, as markets registered the supply implications of the attack within hours. Iran’s maintenance of the Strait of Hormuz blockade has ensured that each new supply disruption from military strikes is not offset by alternative supply. Brent crude fluctuated between $103 and $106 per barrel Monday, while US crude held near $94 following a brief spike to $100 the previous day.
California’s pump prices, already above $5 per gallon statewide, are among the most responsive to each new military development given the state’s tight fuel market. Diesel could reach $5.15 per gallon nationally. Oil company executives from Exxon, Conoco, and Chevron have all briefed White House officials on supply risks, with Exxon’s Darren Woods specifically noting that speculative trading amplifies the market’s response to each new military event.
Wall Street opened the week with mild gains, the S&P 500 rising about 1% following a brief oil price pullback after Sunday’s developments. Oil company stocks have surged to all-time highs since the conflict began. As long as the Iran war continues, US oil prices will remain in a state of continuous responsiveness to military developments, creating an energy market environment defined by persistent uncertainty and volatility.
