US Gas Prices Hit Four Dollars Amid Escalating Iran Tensions
US gas prices have hit $4 per gallon for the first time since late May, as tensions between the US and Iran escalate. The national average reached $4.003 a gallon on Monday, around 13 cents higher than the week before.
The price surge is due in part to concerns over oil flows through the Strait of Hormuz, which carries roughly a quarter of the world's seaborne oil. Benchmark Brent crude surged as much as 4% to breach $90 a barrel in early Monday trading before paring gains.
Vishnu Varathan, Asia Pacific head of macro strategy at Mizuho, warned that 'two-way US-Iran retaliatory strikes not only torpedo the interim truce deal but are a serious escalation.' He added that higher shipping and insurance costs alone could make the delivered cost of oil $10 to $15 a barrel more expensive.
Goldman Sachs' chief economist Jan Hatzius wrote in a Sunday note that while prices could fall quickly if the escalation subsides, 'more attacks on tankers and Middle East infrastructure could push prices back to the $100+ range.'