Gasoline prices are likely to jump this week as oil surged back above $100 on Monday.
The national average price of gasoline hovered at $4.12, according to AAA data, up roughly about $0.53 from a month ago.
The surge in prices are expected after President Donald Trump said the US would move to block all maritime traffic through the Strait of Hormuz following the collapse of weekend negotiations between Washington and Tehran.
Patrick De Haan, the head of petroleum analysis at GasBuddy said “gasoline prices are likely to jump again this week, with diesel expected to follow, until there is a meaningful restoration of shipping through the Strait.”
Gasoline futures rose 4% on Monday pointing to a surge in wholesale prices to retailers.
JPMorgan analysts recently predicted gasoline prices could hit $5 per gallon nationwide if traffic through the Strait of Hormuz, a focal point of the Iran war, remains effectively at a standstill for much longer.
On Sunday President Trump announced a blockade of the energy chokepoint, aimed at cutting off Iran’s oil export route, and ending its practice of demanding toll payments from vessels.
“Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz,” Trump wrote in a social media post.
US crude benchmark West Texas Intermediate (CL=F) surged more than 8% to above $104 per barrel while Brent (BZ=F) crude rose 7.5% to around $102, raising concerns about renewed inflationary pressure and potential drag on global growth.
“Signs are emerging that the system may be coming under increasing strain,” JPMorgan’s Natasha Kaneva and her team wrote on Sunday night.
European and Asian refiners are competing aggressively for cargoes, driving spot physical Brent prices to record highs.
On Friday, dated Brent was priced at $126 per barrel, according to Platts data, after hitting a record of $144 per barrel earlier this month.
Historically, the spread between the physical market and Brent futures contracts is modest, typically $1-$2 per barrel.
“Today’s much wider gap signals a market struggling to source barrels for delivery now, even if it still assumes supply will normalize later,” wrote Kaneva.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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