DENVER — The U.S. West Texas Intermediate futures price — a key measure of U.S. oil prices — has surged more than 8% as Israel and Iran exchange attacks, ABC News reported.
Brent Crude Future prices, another top measure of oil prices, also climbed more than 8%.
Denver7 talked to a Colorado financial advisor about how this conflict in the Middle East could impact gas prices in our state.
"The big thing that the markets and professional investors are focused on in this conflict is 'what could happen if this conflict spirals and gets more severe? How could that impact the supply of oil?'" Allen said.
The jump in oil prices over the last week threatens to raise the price of gasoline for U.S. drivers since crude oil makes up the top ingredient in car fuel.
If oil prices remain at elevated levels, gas prices will likely rise modestly over the coming weeks, industry analysts say. A much more severe price spike could result, however, in the event of an escalation that damages Iranian oil infrastructure or ensnares nearby oil-shipping routes.
"Oil goes through a significant channel in the Strait of Hormuz, and about 20-25% of the oil that is delivered to the world goes through that straight near the Arabian Sea," Bruce Allen of Bruce Allen Investments said in an interview with Denver7.
Asset management firm Lazard also warned on Friday of a possible escalation involving "strikes on Gulf energy installations or attempts to temporarily close the Strait of Hormuz." Such a scenario would trigger "price increases upwards of $120 per barrel," Lazard said in a memo to investors.
A typical gallon of gas could tick up between 10 and 25 cents, the head of petroleum analysis at GasBuddy Patrick de Haan said on Friday, in a post on X. The average price of a gallon of gas currently stands at $3.13, AAA data shows.
"If the price of gasoline jumps, that could increase the inflation rate and if inflation steps up, the Federal Reserve's tool to dampen down that inflation is to raise interest rates," Allen said, referring to the Federal Reserve's interest rate meeting scheduled for Tuesday and Wednesday.
- Watch Denver7's full interview with Allen in the video player below:
Such a price increase could prove short-lived though, the head of near-term oil analysis at S&P Global Commodity Insights Richard Joswick said on Friday in a note to investors.
Joswick pointed to tit-for-tat Israeli and Iranian strikes last October that spiked oil prices before a cooldown when both sides opted against escalation.
"When Iran-Israel exchanged attacks last time, prices spiked, then fell once clear, not escalating and had no impact on oil supply," Joswick said.
