U.S. consumers could soon see an impact at the gas pump from Iran’s Saturday attack on Israel – but the attempted strike isn’t guaranteed to make prices rise.
The Israeli military said it shot down more than 300 missiles and drones with assistance from the U.S. and other allies, marking the first time Iran has launched an attack on Israel from its territory. The strike came after Israeli missiles killed Iranian military commanders in Syria earlier this month.
Iran, one of the world’s largest producers of crude oil, has long been engaged in a shadow war with Israel, but there have been concerns the Israel-Hamas war could become a broader regional conflict.
Michael Walden, Reynolds Distinguished Professor Emeritus at North Carolina State University, said any ripple effects on gas prices depend on the countries’ next moves and whether they seek further retaliation against the backdrop of an already raging war.
“We’re uncertain about what’s going to happen,” he said. “And so the impacts are going to be very dependent upon what does evolve.”
How expensive is gas right now?
The average price for a gallon of regular gas in the U.S. was $3.63 as of Sunday, according to AAA, up almost 4 cents from a week before and 22 cents from a month earlier. The price was down 3 cents from a year ago, however.
Oil prices rose around 1% on Friday over geopolitical tensions in the Middle East but posted a weekly loss in the face of worries about slower cuts to U.S. interest rates and other global economic factors.
Brent crude futures, an international benchmark, settled up 71 cents at $90.45 a barrel, while U.S. West Texas Intermediate crude futures rose 64 cents to $85.66.
But what wasn’t true over a longer stretch. For the week, Brent declined 0.8%, while WTI fell more than 1%.
Oil futures had not yet started trading Sunday following the attack, so it wasn’t immediately clear if it would have swift effects on worldwide prices. Gas is made from crude oil and other petroleum liquids.
How could Iran’s attack on Israel impact gas prices?
It could play out several different ways, Walden explained.
“If Israel does not respond and if Iran did this as a show of force primarily to its citizens and there’s no recurrence, I think the impact will be very, very miniscule,” said Walden.
That’s the best case scenario. If Israel does retaliate, and it becomes a full-fledged conflict, that’s a different story. “And maybe Iran’s oil platforms, refineries are taken out,” he said. “That would send oil prices up.”
Walden noted that there could be a “whole host of scenarios in between” as well. Israel could conduct targeted attacks that avoid oil refineries, for example, but that cause global uncertainty.
“That would probably cause some concern about where this could go, so you’d probably see a spike upward in oil prices, but less so than if it was a full fledged attack,” he said.
If Iran and Israel do continue to clash, U.S. motorists could expect to see an impact on gas prices almost instantly.
Patrick De Haan, head of petroleum analysis at GasBuddy, said there may not be a massive response from Israel, particularly because Iran’s attack was largely unsuccessful. “So, where we stand now is I don’t think oil prices are going to be significantly moved by this,” he said.
What can drivers do to prepare?
Given the fast-moving nature of the events in the Middle East, Walden said there’s not a whole lot consumers can do to insulate themselves from the impacts of any gas price increases. “Most people can’t go ahead and buy gas and stock up before the prices go up,” he said. “It’s not practical.”
If you are planning a last-minute road trip, though, it may be worth going somewhere closer or putting off travel until a later date. Drivers who can take other modes of transportation, such as walking or biking, could consider that as well.
Walden added that gas prices fluctuate seasonally and tend to go up when the weather gets warmer and people are on the road more, so they are likely to continue increasing independent of geopolitical outcomes.
“Everything else equal, nothing else affecting it, we tend to see the highest prices for gas in the summer.”
De Haan said consumers in the Mid-Atlantic and Northeastern states – the last areas where prices generally transition – could see those changes as soon as this week.
“It’s impossible to parse out everything that can impact oil and gas prices,” he said. “It’s never just one thing. But what I can say is that based on where we are today, I don’t see the situation between Israel and Iran having too much effect on the price of oil or gasoline.”