Kiplinger Energy Outlook: War in Iran Spells Higher Gas Prices in the US
A major price spike is unlikely for now, but expect to pay more at the gas pump.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or to subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
After hitting a five-year low earlier this winter, retail gasoline prices are headed higher. The national average price of regular unleaded is back up to $3 per gallon, after bottoming near $2.75 early this year. Motorists can expect to see prices rise in the coming days due to higher crude oil prices stemming from the new conflict in the Middle East. We look for the national average price to hit at least $3.25 in coming weeks. If the U.S.-Israeli air campaign against Iran continues for weeks rather than days and keeps pushing oil higher, average gas prices could near $4. Diesel, which has already risen more than gasoline has, is likely to continue to climb. Now averaging $3.77 per gallon, diesel is likely to surpass $4 soon, and may hit $4.50 if the fighting in the Middle East doesn’t end quickly.
The oil market is clearly worried about potentially large losses of crude exported from the Middle East, especially via tankers that normally pass through the narrow Strait of Hormuz, which links the Persian Gulf to the Arabian Sea and the global market. About a fifth of the world’s oil supply transits this narrow waterway each day. Now, the strait appears to be effectively closed as vessel owners avoid the ongoing conflict in Iran. The Iranian regime could target any tankers that do attempt to transit the strait, just miles from Iran’s coastline. A brief closure should not cause a major surge in oil prices. But if tanker traffic remains shut down for weeks, the loss of supply and the resulting price spike will be significant. Benchmark West Texas Intermediate oil initially rose about 8% when trading opened early Monday, March 2. Now at $72 per barrel, WTI could surpass $80 and even threaten $100 if exports from the Persian Gulf remain off the market for an extended period.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
U.S. natural gas prices are showing a more muted response to the situation in Iran, since the United States is a major gas exporter. Benchmark gas futures contracts rose about 3%, but remain cheap at about $3 per million British thermal units. Weather matters far more to natural gas prices in the United States than upheaval in the Middle East does. And right now, weather forecasts show much of the eastern U.S. warming up with an early start to spring, which means only modest demand for home heating. However, Europe depends heavily on liquefied natural gas shipped from the Persian Gulf. If those exports remain cut off, European purchases of U.S. LNG could cause prices here to climb later this spring.
Related content
- Gas-Saving Tips That Actually Work
- Who Controls Gas Prices in the US?
- Save Money on Heating Costs With These Easy Solutions
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Jim joined Kiplinger in December 2010, covering energy and commodities markets, autos, environment and sports business for The Kiplinger Letter. He is now the managing editor of The Kiplinger Letter and The Kiplinger Tax Letter. He also frequently appears on radio and podcasts to discuss the outlook for gasoline prices and new car technologies. Prior to joining Kiplinger, he covered federal grant funding and congressional appropriations for Thompson Publishing Group, writing for a range of print and online publications. He holds a BA in history from the University of Rochester.
-
Safe or Seizable?: The IRA & Bankruptcy Protection QuizQuiz Depending on the type of IRA you own and/or how you inherited it, your "safe" money might actually be on the table for creditors.
-
New 9.9% Income Tax on Millionaires: What's Happening in WashingtonTax Policy Washington’s tax structure may be headed for another significant shift. Will more states start "taxing the rich"?
-
$3,000 Checks for Most Households? Lawmakers' New Billionaire Tax Plan UnveiledWealth Taxes Two prominent lawmakers are proposing to 'tax the rich' and send some proceeds to taxpayers. Could it be a sign of things to come?
-
Risk-Averse But OK With More Risk Than a CD? These 2 Options Could Work for YouInvestors looking for higher yields might want to consider these hybrid products, which blend the possibility of better returns with less downside risk than traditional investing.
-
How a Simple Clue Unlocked a Workplace Safety Crisis: All We Had to Do Was ListenA lot of people with hearing issues resist wearing hearing aids. "Nicole" had a very good reason not to wear hers, but figuring out why took some sleuthing.
-
Stocks Recover from Massive Morning Drop: Stock Market TodayStocks hit their session lows early Monday in reaction to U.S. airstrikes on Iran, but quickly bounced.
-
I'm a Retirement Editor: Here's the Investing Advice I Gave My SonAs a veteran retirement investor, I'm sharing this advice for your own adult children or grandchildren.
-
Are You Honest With Your Financial Adviser? Why Hiding the Truth Can Cost YouHiding assets or debt from a financial adviser damages the relationship as well as your finances. If you're not being fully transparent, it's time to ask why.
-
How to Manage a Disagreement With Your Financial AdviserKnowing how to deal with a disagreement can improve both your finances and your relationship with your planner.
-
5 Actions to Set Up Your Business With Your Exit in Mind, From a Wealth AdviserWhen you're starting a business, it may seem counterintuitive to begin with exit planning. But preparing will put you on a more secure footing in the long run.
-
A Top Vanguard ETF Pick Outperforms on International StrengthA weakening dollar and lower interest rates lifted international stocks, which was good news for one of our favorite exchange-traded funds.