US Oil Prices Approach $3.85 as Iran War Extends Supply Shock Into Third Week

US oil prices are approaching $3.85 per gallon at the pump as the Iran war extends its supply shock into a third consecutive week. Petroleum analyst Patrick De Haan has placed Monday’s forecast at $3.80 to $3.85 per gallon, while cautioning that $4 fuel remains within reach. The extended duration of the conflict has deepened the supply shock beyond what markets initially anticipated when hostilities began.
The supply shock was set in motion on February 28, when US and Israeli forces launched their first strikes against Iran, triggering an immediate and sustained rise in global oil prices. The national gasoline average has since climbed 23% to $3.70 from below $3 per gallon before the conflict. Three weeks of sustained military operations have removed significant oil supply from global markets, with each new escalation adding to the pressure on prices.
Friday’s US strike on Kharg Island, which processes a substantial portion of Iran’s crude oil before export, was among the most significant attacks on energy infrastructure in the conflict to date. Iran’s continuing blockade of the Strait of Hormuz has removed roughly 20% of the world’s daily oil supply from global markets. Brent crude fluctuated between $103 and $106 per barrel Monday, while US crude held near $94 after briefly touching $100 on Sunday.
California has been the epicenter of the domestic price crisis, with state averages above $5 per gallon and some Los Angeles stations charging over $8. Diesel used by trucking and freight companies could reach $5.15 per gallon nationally. White House officials have been directly briefed by Exxon CEO Darren Woods, and by leaders of Conoco and Chevron, on the deteriorating supply situation and the risk of speculative trading driving prices well above fundamental levels.
Wall Street found modest footing Monday as crude prices briefly retreated, with the S&P 500 gaining around 1% in early trading. Oil sector shares have climbed to historic highs since the conflict began, reflecting the financial windfall that elevated oil prices represent for energy producers. The supply shock that has driven US oil prices to current levels will persist for as long as the military conflict continues and the Strait of Hormuz remains closed.