Escalating Iran War Threatens Higher Gas Prices

Oil prices have surged past $100 per barrel after weeks of escalating military action across the Middle East, and experts warn that gasoline prices may rise even higher. National average gasoline prices have already climbed above $4 a gallon.

According to Bob McNally, founder of Rapidan Energy Group, 'this has been one of the biggest cases of energy market mispricing in modern times.' The latest outbreak of violence could send oil prices much higher, he added.

The conflict in Iran and the region has now stretched for five months, leaving oil inventories significantly lower than when the fighting began. Damage to refineries, export terminals, and shipping routes has reduced the flexibility that previously helped stabilize global energy markets.

Many of the temporary buffers that got us through the first months of the supply shock have been worn away, said Ben Cahill, an energy scholar at the University of Texas at Austin.