It’s been a wild ride if you’ve been keeping track of oil prices lately. With the conflict in Iran raging on with no outlined endpoint, uncertainty is causing oil prices to jump rapidly. Greg Upton, Executive Director of the LSU Center for Energy Studies, says the worst is most likely yet to come. “We’ve seen about a 40 cent increase over the last two weeks and we’re likely to see maybe a 40-50 cent increase in the upcoming few weeks,” Uptown explained. That would equate to close to a dollar per gallon more at the pump than you’re already paying.
The events of this past week, culminating in the assassination of Iran’s supreme leader have driven global uncertainty and sent oil prices skyrocketing. Problems securing the Strait of Hormuz where roughly 20% of the global oil supply moves through has also put quite a bit of upward pressure on the price of oil. How long will that pressure last? That’s hard to tell, even according to the experts. “Right now, futures markets are expecting prices to come down pretty quickly. So, it’s hard to tell how long it’ll last, but definitely a short-term impact on gasoline prices at the minimum,” Upton noted. “It’s really impossible to predict what will happen on a daily basis,” he went on to add.
While prices at the pump are squeezing plenty of people, Upton points out that a little historical perspective can help. “The highest inflation-adjusted oil price we ever saw was back in 2008. That was peaking at above $200 per barrel in inflation-adjusted terms compared to today. That’s twice the price per barrel we’re seeing today,” he explained. Upton also referenced the Russian invasion of Ukraine spiking oil prices at $127 per barrel, which is higher than we’re currently seeing. He says a daily oil price of around $110 per barrel is probably a reasonable expectation going forward, but uncertainty about how the war will further unfold could change things quickly.