Despite the Israel-Hamas conflict, energy industry analysts predict that fuel prices in the United States will continue to decrease. Global crude oil briefly surged to over $87 a barrel after Hamas’ surprise attack, up from below $83 the previous week, but has since fallen to $83.62. Israel and its neighboring countries are not major energy producers, so unless the conflict expands geographically, seasonal trends should remain largely unaffected.
Tom Kloza, the global head of energy analysis at the Oil Price Information Service, anticipates gasoline prices dropping across all 50 states. Currently, the average price for a gallon of regular gas in the U.S. is $3.66, down from $3.83 a month ago. Gas prices are decreasing as the summer travel season comes to an end, and refineries transition to producing cheaper and easier-to-produce winter fuel blends.
Although there was an initial spike in crude oil prices, it’s considered a temporary “knee-jerk reaction” by GasBuddy analyst Patrick De Haan. He sees a “very low risk” of U.S. gas prices rising. However, Kloza warns that an expansion of the conflict to Iran could change the situation, as Iran has supported Hamas militarily.
The rollout of the winter fuel blend is expected to contribute to falling gas prices over the next few weeks, with estimates of up to a 2 cent per gallon decrease per day. This could result in an average gallon of regular gas costing $3.25 by Halloween.
While the conflict has affected the operations of energy producers, including natural gas, there are no expectations of significant disruptions in global supplies, and natural gas prices have been decreasing.
The Energy Information Administration predicts that most U.S. households will spend less to heat their homes this winter, with the biggest drops in natural gas costs, expected to shrink by an average of 21%.
Crude oil prices on international markets have been volatile due to uncertainty surrounding Middle East violence and potential disruptions in oil shipping routes. A wider conflict involving Iran may impact the oil trade through the Strait of Hormuz, which connects the Persian Gulf to the Arabian Sea. However, the U.S. could rely on its domestic production capacity even if Iran were to block exports through the strait, as U.S. crude oil exports reached a record high in the first half of 2023, solidifying America’s position as the largest oil producer in the world.
In conclusion, while oil markets are sensitive to turmoil, as long as the violence does not escalate into other regions, it is unlikely to worsen, according to De Haan.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Euro Tidings journalist was involved in the writing and production of this article.