The U.S. economy might face a new wave of inflation after the country launched airstrikes on three nuclear sites in Iran.
Experts warn that oil and gas prices are almost certain to rise. The big unknown is how long those high prices will last.
Oil prices could jump by about $5 per barrel when markets open on Sunday. Andy Lipow, an oil expert, said, “We are looking at $80 oil on the open.” U.S. oil hasn’t stayed above $80 per barrel since January and has mostly stayed between $60 and $75 since last August.
Lower oil prices recently helped bring gas prices down to under $3 a gallon in many places, giving consumers some relief. But that may change soon.
It’s not clear if oil prices will stay high for long. Prices have gone up about 10% since Israel’s surprise attack on June 13, but dropped again Friday after President Trump gave Iran a two-week deadline to respond.
Economist Joe Brusuelas said, “Just because oil prices go up doesn’t mean they’ll stay up. They often come back down.”
A lot depends on whether Iran tries to block the Strait of Hormuz—a key waterway that handles about 20% of the world’s oil shipments.
Iran’s Foreign Minister said his country is considering many options. One of the top advisers to Iran’s Supreme Leader has already said they should close the strait.
Bob McNally, a former energy adviser to President George W. Bush, said that if Iran blocks the strait, the U.S. and its allies might strike back with military force. Iran might also attack oil and gas facilities in the Persian Gulf.
“They may try to scare President Trump with a spike in oil prices,” McNally said.
U.S. Secretary of State Marco Rubio, speaking on Fox News, asked China to step in and tell Iran not to close the Strait. He said closing it would hurt China’s economy more than America’s, since China buys about a third of the oil from that area, while the U.S. buys less than 3%.
Rubio added that shutting down the strait would affect other countries more than the U.S.
Meanwhile, gas prices in America could go up quickly. Patrick De Haan, a fuel expert from GasBuddy, said, “It takes five days or so for stations to pass on higher oil prices. If markets jump today or tomorrow, we could see gas prices rise in just a few hours.”
Lipow added that if the Strait of Hormuz is blocked, oil prices could hit $100 a barrel. That would raise gas and diesel prices by about 75 cents per gallon.
Brusuelas also warned that U.S. trade policies and the war with Iran could push inflation higher in the next three months. He said the low inflation in the spring may have been just a break before prices climb again, especially with new tariffs announced by Trump.
