What does Iran’s military conflict mean for oil prices? This is what the experts say.

this US military strike Questions are being raised about the impact on oil and gas supply, including whether widening conflict will lead to higher energy prices for Americans.

Prices of Westexas Intermediate crude oil in the U.S. benchmark, rose 4% Sunday night shortly after trading began, but fell more than 7% on Monday afternoon. Declines because experts speculate that Iran is unlikely to close Hormuz StraitThis is the main commercial waterway partially controlled by the country, which is crucial for crude oil flow into global markets.

Iran’s parliament on Sunday approved the strait cutting, leaving the final decision to the National Security Council. Ceasefire agreement between Israel and Iran President Trump announces It seemed like it was staggering in a few hours earlier Tuesday.

The geopolitical crisis has raised concerns that worsening hostilities could squeeze the world’s oil supply, which could drive gasoline and other energy costs, as well as other products that improve from crude oil. Iran said on Monday An attack was launched At the U.S. Udeid Air Force Base in Qatar.

Iran is the main producer of crude oil, controlling the northern side of the Strait of Hormuz, which is used by ships carrying the world’s daily oil supply.

“In fact, Iran’s efforts to ‘close’ the straits may include many actions, including the use of waterways to attack and detain ships, hindering the navigability of the straits and laying mines at sea in the most extreme seas,” David Oxley, chief climate and commodity economist, noted in a report.

However, he added:[S]o As long as the conflict does not become a lasting war without a “ramp”, and the damage to the straits remains limited to the low-level actions seen so far, we suspect that any initial peaks in global energy prices will dissipate soon. ”

This is what to know About the Iran conflict Potential impact on oil and gas prices.

What impact has it had on oil prices so far?

The price of international standard Brent crude fell 0.1% to $76.98 after a surge in early trading on Monday. The US benchmark West Texas Intermediate (WTI) crude oil fell 3.8% to $71.06.

Still, oil prices were above its level before hostilities between Israel and Iran a week ago, when WTI crude barrels were close to $68.

Although Wall Street experts predict that Iran is unlikely to close the Hormuz Strait, they noted that ongoing tensions in the region could undermine energy markets and send out price surges.

“Perhaps the greater risk to oil supply in the region is Israel’s strike on Iran’s oil production and export facilities, and/or Iranian agency attacks on Iraq’s oil production and export facilities,” analysts from Eurasia Group said in a June 23 report.

So far, Israel has avoided oil exports targeting Iran. But if you want to do so, this strike could ruin millions of barrels of flow per day, bringing Brent crude prices above $80 a barrel.

What happens if the Strait of Hormuz is closed?

Since the Hormuz’s strait is only 21 miles in its narrowest position, it is easily disturbed. The strait connects the Persian Gulf to the Gulf of Oman and the Arabian Sea.

Although energy experts believe it is unlikely to close the strait, pointing to the adverse economic and geopolitical impact on Iran, they stress that the damage to oil flows through passes will cause energy prices to soar.

The U.S. Department of Energy Energy Information Administration (EIA) said oil disruptions through the channel would seriously affect markets in China, India, Japan and South Korea.

The United States imports about 7% of its oil through the Hormuz Strait only. However, according to experts, any interference with transport through the region could affect the global oil market by stifling supply.

“[W]”Iran Hill has not targeted this route yet, and even limited damage can seriously affect global supply,” Oxford economics analysts said in a client announcement on June 20. “In the worst case, prices could soar to $130 a barrel and shave off 0.8 percentage points of global GDP. ”

According to the EIA, the last time Brent crude oil exceeded $130 was in 2008, the result of a surge in energy demand and uncertainty over the world’s energy supply. At that time, gasoline prices were about $4.11 per gallon after adjusting for inflation, and about $6.26 per gallon.

What is the forecast for US gasoline prices?

U.S. drivers may see higher gasoline prices on pumps next week, ranging from 10 cents to 15 cents a gallon, said Gasbuddy analyst Patrick Dehaan.

“Most/all expected rises of recent times are due to tensions/situations in the Middle East,” he said in an email to CBS MoneyWatch.

Even with this increase, American drivers may still pay less on pumps than they were a year ago. According to AAA, the average natural gas price in the U.S. is $3.22 per gallon, down from $3.45 per gallon a year ago.