The war with Iran has made summer gas prices unpredictable, as President Donald Trump’s shifting messaging on hostilities keeps the energy markets in limbo.
There’s little concrete direction on where gas prices could go in the coming months, an expert told the Washington Examiner, since the conflict has been characterized by constant unpredictability so far. The volatility was underscored over the past few days, when Trump said Monday that the United States was on the cusp of a “powerful deal” to resolve tensions, before announcing Wednesday that Washington is planning to attack Iran “very hard.”
“Gas prices this summer could fall below the $4 mark; they could go above $5,” Patrick De Haan, an analyst at GasBuddy, told the Washington Examiner. “I think for motorists, we’re all kind of living this uncertainty.”
But De Haan said the energy market seems to be taking the changes in stride, at least so far.
“From the psychological standpoint, the market is now accustomed to this situation, and unless there’s some sort of wild and completely unpredictable development, the market may respond in a more measured way now because it’s not as fearful of the unknown,” De Haan said. “We’ve been at this 100 days now, and I think there’s been a lot of twists and turns, so the market’s not really shocked by new developments.”
Gas prices soared to record highs after the Iran war sparked on Feb. 28, largely due to sweeping disruption in the Strait of Hormuz. Iran’s hold over the critical Middle Eastern passageway has discouraged activity in the area, triggering a sweeping blockage of oil tankers and a global energy emergency.
Gas prices were trending downward as of Thursday. AAA analysis at the time indicated that the national average for a gallon of regular gasoline was down 18 cents since the previous week, marking the second straight week of decline. Wednesday’s national average is 4.15, per AAA, down another 9 cents.
That’s because of a myriad of actions, including countries falling back on their emergency oil reserves. But it’s also because ships are slowly making their way through the Strait of Hormuz again, with reports last week indicating nearly 1,000 commercial vessels have passed through in the past two months. The U.S. military has sought to establish a foothold in the region, boosting its security presence to guard friendly tankers in the waterway. Countries have used “shadow” fleet tactics to avoid Iranian fire, with 900 having sneaked through during the war, according to the New York Post. Activity in the passageway remains only a fraction of pre-war operations, but it’s “not nothing,” De Haan said.
Still, he emphasized that much uncertainty remains in energy markets surrounding the Strait of Hormuz, including the foundational question of whether it is open or closed.
“It’s not a gate, it’s not just either fully open or closed,” he said. “There’s so many scenarios on every one of these things, and that’s why it’s impossible to get any model, any reputable model that actually knows, because you have your model output, and in six hours something new develops … I mean, I think the Saudi energy minister said it best, he has no way to predict this, so why comment on it?”
TRUMP SAYS IRAN WILL ‘PAY THE PRICE’ AFTER TAKING TOO LONG TO NEGOTIATE
For now, the energy markets appear to be taking a “measured” response to the ongoing conflict, as months of back-and-forths between the U.S. and Iran have settled into a new normal.
“Now it’s not a panic, right, because we’ve woken up, the sun has risen for the last 100 days since it started,” De Haan said. “There’s a measure of known responses, right? Iran hasn’t nuked the world, the U.S. hasn’t nuked the world, so from that standpoint, the worst potential hasn’t been realized, the best potential hasn’t been realized.”