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Gasoline prices are expected to turn higher in the next week as oil holds above $100 per barrel amid uncertainty over the US-Iran war.
The national average rose to $4.11 per gallon on Monday, up about $0.07 from a week ago, according to AAA data. The move higher comes as talks between the US and Iran appear to be at a standstill, while shipping through the Strait of Hormuz, a key global oil route, remains at minimal levels.
Governments abroad have been aggressively drawing down their strategic petroleum reserves to low levels.
“We cannot draw inventories forever,” Andy Lipow, president of Lipow Oil Associates, said in a note on Monday morning. “While oil inventories in the USA are currently adequate, as the world turns to the USA for supply, our inventories drop and in the worst case reach minimum operating levels in a few months.”
Lipow predicts gasoline prices in the US will increase to $4.20 per gallon over the next 7 to 10 days.
Read more: What’s the Strategic Petroleum Reserve, and can it help lower gas prices?
Crude prices edged higher on Monday, with Brent crude futures (BZ=F) holding above $101 a barrel. West Texas Intermediate (CL=F) rose close to $96 at last check after Axios reported that Iran has put forward a new proposal to lift its blockade of the key Hormuz waterway but would push nuclear negotiations to a later date.
Absent any new negotiations, Lipow forecasts that the WTI crude oil price will drift back up to $100 and Brent will top $110.
“The longer the conflict goes on, the higher the price—especially as inventories are drawn down to critical operating levels,” Lipow wrote, adding that if the conflict ended tomorrow, crude oil prices are estimated to drop $10 per barrel.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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