There’s no easy answer for when gas prices will drop in the currently uncertain political climate. That applies even to the experts. With mixed messaging happening on both sides if the US/Iran conflict, the oil markets remain shaky day to day.
So, why aren’t oil prices plateauing and dropping back off? And what can consumers expect if this conflict drags on and on? Patrick De Haan, Chief Petroleum Analyst for Gas Buddy says it ultimately comes down to supply and demand.
“Oil is not going to stop going up until either demand plummets (which is not likely to happen given that we’re in summer), or until the situation in Iran ends. There’s a continued imbalance in continued supply and demand. That’s why oil prices won’t just level out,” De Haan explains. He adds that every day creates an additional 20 million barrel per day imbalance in the level of demand vs supply worldwide.
“The markets were getting optimistic last week and oil prices fell on the hopes of a deal.Now, we’re back on the edge of our seats waiting on a deal, the United States has resorted to new attacks on Iran and Iran says they’ll retaliate. As oil markets try to figure this out, we might be paying more at the pump this week. If there is a deal, we might be paying a little less,” adds De Haan.
As far as a return to “normalcy” when it comes to prices at the pump, that process will only begin once the Strait of Hormuz is fully reopened. De Haan doesn’t think a return to those pre-war prices will be impossible … but, it may take patience. “Probably 6-12 months down the road, we could get back to the $2.70 price we were paying around a year ago today. It could take even longer, maybe over a year,” he went on to note.
Even optimistic timelines for pre-war prices say it could take over a year
Even optimistic timelines for pre-war prices say it could take over a year
