NEW YORK, NY – Just as gasoline prices have been coming down, you can expect prices at the pump across New York and New Jersey to start edging their way back up this coming winter after bad news from the Middle East.
Oil prices escalated by more than $2 a barrel on Friday amid increasing tensions in the Middle East. The surge followed reports that U.S. military jets struck Iranian targets in Syria in response to attacks on U.S. forces by Iranian-backed militias. Investors fear that the growing conflict could disrupt oil supplies from key producers in the region.
Brent crude futures for December increased $2.03 to $89.96 a barrel, while the U.S. West Texas Intermediate for December climbed $1.89 to $85.1 a barrel. These price shifts come after Iranian Foreign Minister Hossein Amirabdollahian warned that the United States could “not be spared from this fire” if Israel’s actions against Hamas persisted.
In a separate development, projectiles struck two Egyptian Red Sea towns, injuring several people and escalating concerns of regional spillover. Israeli forces, meanwhile, conducted their largest ground attack in a 20-day conflict with Hamas, heightening fears of a full-scale invasion.
While oil supplies have not been directly impacted, concerns are growing that the conflict could disrupt exports from Iran, a major crude producer and supporter of Hamas. There are also worries that Saudi Arabia, the world’s largest oil exporter, could see its shipments affected if the conflict intensifies.
Analysts express uncertainty about the current crisis’s trajectory, making it challenging to predict outcomes. Goldman Sachs maintained its first-quarter 2024 Brent crude price forecast at $95 a barrel but noted that prices could rise by 5% with reduced Iranian exports. A 20% price jump could occur if trade through the Strait of Hormuz, responsible for 17% of global oil production, faces interruptions.
Despite a bright spot in U.S. economic data showing rapid growth, the overall outlook for oil demand remains uncertain. John Evans of oil broker PVM said that these “millstones around the neck of economic growth” would continue to weigh on the oil market for the foreseeable future.
