With approximately one-fifth of the world’s oil supply currently blocked from global markets by Iran’s Strait of Hormuz closure, US oil prices face the prospect of further gains as the conflict enters its third week. Analyst Patrick De Haan has placed his Monday pump price forecast at $3.80 to $3.85 per gallon, while $4 gasoline remains within reach. The severity and duration of the supply disruption has surpassed the expectations of many energy market observers.
The crisis began on February 28, when US and Israeli forces launched their campaign against Iran, setting off a chain of supply disruptions that has pushed the national gasoline average from below $3 to $3.70—a 23% rise in under three weeks. The conflict has progressively targeted oil production, processing, and transport infrastructure, removing significant supply from global markets. The sustained nature of the price increase has made it one of the more consequential energy shocks in recent US history.
Friday’s US strike on Kharg Island, Iran’s primary oil processing and export hub, has further reduced available oil supply at a time when markets are already strained. Iran’s continued closure of the Strait of Hormuz has compounded the supply shortfall, keeping approximately 20% of the world’s daily oil off international markets. Brent crude fluctuated between $103 and $106 per barrel Monday, while US crude held near $94 after briefly reaching $100 the previous day.
California’s consumers are bearing the heaviest burden domestically, with state averages above $5 per gallon and some Los Angeles stations posting prices above $8. Commercial users of diesel face potential costs of $5.05 to $5.15 per gallon nationwide. The heads of Exxon, Conoco, and Chevron have each engaged the White House on supply risks, with Exxon CEO Darren Woods explicitly warning that speculative trading could drive prices even further above levels justified by physical supply conditions.
Wall Street managed modest gains Monday as oil prices briefly retreated, with the S&P 500 rising about 1% in early trading. Oil company shares have surged to record highs since the conflict began, benefiting from the same elevated prices that are straining consumer budgets. The energy market will remain in turmoil until the Strait of Hormuz is reopened and military operations in Iran come to a close.