(NEW YORK) -- The U.S. and Israel's large-scale strikes on Iran Saturday are expected to rattle oil markets when trading resumes Sunday evening, with analysts anticipating an immediate price reaction and impact on gas prices.
The central concern isn't just Iran's oil production, but its influence over the Strait of Hormuz, one of the world’s most important checkpoints for oil.
According to the U.S. Energy Information Administration, roughly 20% of the world's oil passes through the strait, making Iran’s threats to close the waterway a significant risk. The U.S. is trying to control for this situation by vowing to "annihilate" Iran's navy.
Saudi Arabia and the United Arab Emirates have limited infrastructure in place that can bypass the Strait of Hormuz, which has the potential to mitigate any transit disruptions, but not offset them entirely.
While Iran has never followed through on these threats in the past, the perception of risk is still enough to move markets.
GasBuddy’s Patrick DeHaan expects crude oil to jump 5-10% as markets reopen, pushing oil above $70 a barrel.
While this would be much less dramatic than the response to the start of the Russia-Ukraine war in 2022, which drove prices above $100 a barrel, it would still move the average price of gas to above $3 a gallon for the first time this year.
DeHaan noted that gasoline and diesel prices in the U.S will not skyrocket overnight, and the actual impact will depend on the intensity and duration of the conflict.
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