US and Israeli strikes on Iran could rattle oil markets
A plume of smoke rises after an explosion on February 28, 2026 in Tehran, Iran. (Photo by Majid Saeedi/Getty Images)
(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.
Customers pump gas into their car at a 76 station, May 4, 2026 in Los Angeles (Justin Sullivan/Getty Images)
(NEW YORK) — Sky-high gasoline prices are hammering drivers across the United States as the Iran war chokes off global oil supply. California, however, may be feeling the sting more than anywhere else.
The average price of a gallon of gasoline in California clocks in at $6.13, standing 36% higher than the national average, AAA data showed. Some elected officials in the state have warned of a potential oil and gas shortage that could push prices up even further.
Siva Gunda, the vice chairman of the California Energy Commission, on Tuesday said at a hearing of the state assembly that California retains enough gasoline to satiate demand over the coming weeks.
“I do not see presently — at least up to six weeks — a supply shortfall,” Gunda said. “Beyond that, based on what we’re hearing from the industry and what we’ve observed, the pricing will move molecules to California, but it will come at a price.”
David Alvarez, a Democratic California state assembly member who represents Southern San Diego, warned of the potential impact on consumers.
“For six weeks, at least, there seems to be some certainty. But almost as certain is if this situation continues after six weeks, we would likely see some price increases,” Alvarez said.
Fuel prices in California typically run higher than other states, even in the best of times. That usual price disparity stems from regulations and taxes imposed in the Golden State, among other factors.
The Iran war has exacerbated the price pressure, exposing California’s dependence in large part on foreign imports, some analysts said. A shutdown of some key oil refineries in recent months worsened California’s vulnerability, slashing the state’s gasoline output in the absence of alternative fuel sources.
Still, the drop-off in gas supply is unlikely to produce a shortage of product at local gas stations, since an ongoing surge in prices should deter some buyers, analysts said. Under such a scenario, known as “demand destruction,” high prices make gas unaffordable for some drivers, forcing them to forgo gasoline use altogether.
“A shortage within the continental U.S. would take a really extreme situation, since prices respond to supply and demand,” Susan Bell, a senior vice president at the consulting firm Rystad Energy, told ABC News.
The Middle East conflict, which began on Feb. 28, prompted Iran’s effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the worldwide supply of oil. As a result, global oil prices have soared more than 50%.
The vast majority of oil that passes through the strait is bound for Asian markets, but some of it reaches the United States, including California. That dependence has worsened a widely felt problem: since oil prices are set on a global market, prices have climbed for just about everyone as buyers chase fewer barrels of crude.
California imports about three-quarters of its oil from foreign nations and Alaska, California Energy Commission (CEC) data shows. Roughly 30% of the state’s oil comes from the Middle East, especially Iraq and Saudi Arabia, according to the agency.
“California is challenged buying crude oil because they did buy from the Middle East,” Bell said.
The oil bottleneck has driven up the price of crude, straining the state’s supply chain. But the shortfall of gasoline in the state owes primarily to a decline in the availability of refined products, some analysts said.
California ships in a portion of its auto fuel from Asia, but those imports have been disrupted by the war, they added.
The shutdown of two major oil refineries in recent months has diminished the state’s ability to make up for the lost gasoline with in-state production, they added. A longstanding absence of adequate pipeline infrastructure connected to other states, meanwhile, has prevented California from turning to domestic supply.
Gasoline inventory in the state averaged 9.55 million barrels over the four weeks ending on April 24, CEC data shows. That figure puts inventories near the lowest level on record dating back to 2005, according to a Reuters analysis. That total stock includes non-California gasoline, blending components and California’s gasoline blend.
“California has designed an energy island in terms of the products we actually use. We’re not connected to the rest of the U.S. as efficiently as many other states are,” Paasha Mahdavi, a professor of energy governance and political economy at the University of California, Santa Barbara, told ABC News.
As a result, Mahdavi added: “There’s a crunch hitting gas stations.”
Despite the supply squeeze, California is unlikely to suffer from long lines at gasoline stations or customers leaving with empty tanks, some analysts said.
Rather, the price of gasoline will continue to move up, reaching such heights that some buyers will turn to alternatives or simply go without fuel, Severin Borenstein, a professor of Business Administration and Public Policy at the University of California, Berkeley, told ABC News.
If public officials were to put a price cap on gasoline, then customers would likely flock to the pump and empty inventories, Borenstein added. As prices surge, however, customers will fall out of the market instead.
“We don’t have any gas lines because we don’t regulate the price of gas,” Borsenstein told ABC News. “As much as people hate high gas prices, they hate gas lines even more.”
(NEW YORK) — Hiring slowed in April as a rise in fuel prices hammered shoppers weeks into the war with Iran, U.S. government data on Friday showed.
The U.S. added 115,000 jobs in April, according to the report, which marked a cooldown from 178,000 jobs added in March. The reading for April exceeded economists’ expectations.
The unemployment rate held steady at 4.3% in April, the Bureau of Labor Statistics (BLS) said. Unemployment remains low by historical standards.
The U.S. Bureau of Labor Statistics (BLS) collected the previous month’s survey data through the second week of March, before the full effects of the oil shock set off by the war.
As in previous months, the health care industry stood out as a top source of hiring in April, adding 37,000 jobs, the BLS said. The retail sector, as well as transportation and warehousing, also contributed to the increase in hiring.
Employment in the federal government continued to decline in April, shedding 9,000 jobs, the BLS said. The federal government has lost 348,000 jobs, or nearly 12% of its workforce, since October 2024, a month before President Donald Trump was elected.
The hiring figure for March was revised upward from 178,000 jobs added to 185,000 jobs added. Hiring for February, however, was revised downward from a loss of 133,000 jobs to a loss of 156,000 jobs.
The fresh data arrived as the war continues to drive up gasoline prices and borrowing costs, threatening a drag on the economy.
The U.S. added an average of about 15,000 jobs per month in 2025, BLS data showed. That performance indicated a drop-off from 186,000 jobs added each month in 2024.
The Middle East conflict, which began on Feb. 28, prompted Iran’s effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the worldwide supply of oil.
The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.
The price of an average gallon of gas stands at $4.54 as of Friday, marking an increase of $1.56 per gallon since the war started, AAA data showed. That amounts to a roughly 50% jump in about two-and-a-half months.
In theory, a prolonged oil shortage could drive up prices for a vast array of goods, sapping energy from consumer spending, which powers most of the nation’s economic growth.
A potential jump in costs for additional goods delivered through the Strait of Hormuz — such as fertilizer and diesel fuel — could also raise prices beyond gasoline, putting pressure on the Federal Reserve to hike interest rates in an effort to quell inflation.
Last month, Fed Chair Jerome Powell described the economic outlook as “highly uncertain.”
“We’re kind of waiting to see what happens with events in the Middle East,” Powell said.
The Fed has opted to hold interest rates steady at three consecutive meetings since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.
The benchmark interest rate stands at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.
If the Fed moved to raise interest rates, it would hike borrowing costs for many consumer and business loans, risking a slowdown in hiring.
Markets peg a roughly 70% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool.
A picture of Qatar Energy’s operating facilities on March 3, 2026 in Ras Laffan Industrial City, Qatar. Qatar Energy announced a complete halt to liquefied natural gas (LNG) production at its Ras Laffan and Mesaieed facilities on March 2, 2026, after Iranian attacks targeted energy facilities. (Photo by Getty Images)
(NEW YORK) — Iranian attacks on significant energy infrastructure and refineries in several Gulf countries pushed oil and gas prices higher in volatile trading on Thursday.
Brent crude oil prices, a benchmark for global trading, climbed by about 6%, hitting $116 per barrel for contracts to purchase oil in May.
The benchmark for European gas also surged by about 15% after Iran on Wednesday released retaliatory strikes targeting energy sites in several Gulf countries.
An Iranian drone struck a Saudi Aramco refinery in Yanbu, on the Red Sea, on Thursday, according to the Saudi Ministry of Defense, which said the extent of the damage was being assessed. That refinery is a joint venture between Aramco and the U.S.-based Exxon Mobil Corp.
Kuwait also on Thursday said its Mina Al-Ahmadi Refinery, which is run by the state-owned National Petroleum Company, had been struck by a drone. There was a “limited” fire at the facility, according to the official Kuwait News Agency.
Qatari authorities said on Wednesday that Iranian ballistic missile attacks caused fires and “extensive damage” at the Ras Laffan terminal, which carries about one-fifth of the global supply of liquid natural gas. Qatar Energy, which runs the terminal, has said on March 2 that it would bring liquefied natural gas production at Ras Laffan to a halt.
Iran’s Islamic Revolutionary Guard Corps had issued warnings for several Gulf energy production sites, including the refinery in Yanbu, after Wednesday’s Israeli strikes on the South Pars Gas Field, the largest in Iran.
Those attacks added uncertainty to a market already on edge, as the overall conflict and the near-closure of the vital Strait of Hormuz by Iran has sent key energy prices higher.
The Dutch Title Transfer Facility, which is widely seen as the European benchmark for natural gas, saw forward-looking contracts for next month climb about 15% in midmorning trading on Thursday. Trading was volatile, and those contracts had registered intraday gains as high as about 30% in morning trading.
Since the conflict began on Feb. 28, with U.S. and Israeli strikes on Tehran, the TTF benchmark’s rate has about doubled. Intraday prices on Thursday hovered above about 60 euro per MWh, while those LNG contracts had traded below 30 euro per MWh between mid-November and mid-January.
Brent crude had been trading prior to the conflict near $70 a barrel. Prices has previously peaked at about $120 a barrel on March 9.
