U.S. benchmark oil prices experienced a slight increase of 0.2% Monday morning, rising to nearly $74 a barrel, following significant volatility due to investor caution surrounding Iran’s reaction to U.S. strikes on its nuclear facilities. This modest gain marked a notable decrease from a nearly 4% spike observed the previous evening when commodity futures began trading. Despite the current price being the highest since late January, it remains close to the 2023 average, potentially translating to gasoline prices around $3.30 a gallon.
Wall Street analysts emphasized the substantial uncertainty injected into the market by President Trump’s strikes, paralleling concerns raised by his fluctuating tariff announcements. UBS analysts indicated that the direction oil prices might take in the coming weeks largely hinges on the nature of Iran’s retaliation. Should Iran’s response remain subdued, prices could decrease; conversely, threats to Middle Eastern energy infrastructure increase the risk of sharp price surges.
Trump urged efforts to keep oil prices down via social media, while the focus remains on Iran’s potential to restrict access to the Strait of Hormuz, a vital conduit for global oil transport. Reports highlighted that Iran’s parliament supported the idea of closing the strait, but any decision would come from its national security council. Analysts suggest a closure is unlikely as it would constrain Iran’s own exports. ING analysts outlined potential Iranian strategies, including escalation that may involve other nations, disrupting the Strait of Hormuz, or taking no action, but chose to refrain from speculation. Ultimately, they concluded that the U.S. strikes would predominantly heighten uncertainty and impact oil pricing.
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