Brent crude oil slipped but still held above $100 per barrel on Monday, pushing national average gasoline prices to their highest level since October 2023 as President Trump urged allies to help protect oil tankers from Iranian attacks in the key Strait of Hormuz.
As the US pressed hard to reopen the conduit, the Dow Jones Industrial Average rose nearly 400 points, or 0.8%, and the S&P 500 and Nasdaq gained 0.8% and 1.2%, respectively. The gains came after steep losses last week.
Iran’s shutdown of the Strait of Hormuz — a critical Persian Gulf chokepoint that typically sees 20% of the world’s oil supply pass through — has resulted in the largest oil supply disruption in history. Oil benchmarks have soared more than 40% since the Feb. 28 start of the war. But prices retreated Monday with Brent settling at $100.21, down 2.8%, and West Texas Intermediate crude falling 5.3% to $93.50.
National average gasoline prices notched $3.72 on Monday, their highest level since October 2023, according to AAA, while diesel jumped to $4.99 – threatening to hammer the trucking industry and send prices higher on food, apparel and other retail goods.
Prices could soon surge even higher since gasoline demand tends to spike around spring break, as temperatures warm up and more drivers hit the road, according to AAA.
Trump, meanwhile, has hinted at additional strikes on a vital Iranian oil hub that could further disrupt global supply and prices, after saying US attacks on Kharg Island over the weekend targeted military infrastructure, not energy equipment.
The strikes on Kharg Island “totally demolished” most of the island, but “we may hit it a few more times just for fun” if Iran continues to attack tankers in the strait, Trump told NBC News on Saturday.
The site contains Iran’s main oil export hub, so a direct strike there could further worsen supply disruptions and significantly ramp up geopolitical tensions.
Trump has also demanded allies help protect tankers attempting to traverse the strait, as Iran has reportedly begun laying mines throughout the maritime route and attacking oil vessels.
The White House is planning to announce as soon as this week that multiple countries have agreed to help escort tankers through the treacherous waterway, the Wall Street Journal reported, though officials are yet to decide whether the assistance would start before or after the war ends.
Treasury Secretary Scott Bessent said Monday that the US has been allowing Iranian oil tankers to move through the strait in an effort to minimize supply disruptions.
“The Iranian ships have been getting out already, and we’ve let that happen to supply the rest of the world,” Bessent told CNBC during an interview in Paris, where he was meeting Chinese officials for trade negotiations.
“We think that there will be a natural opening that the Iranians are letting out, and for now we’re fine with that. We want the world to be well supplied,” he said, adding that the US believes Indian and Chinese ships have been able to make it out of the Gulf.
Even if the war ends soon, analysts have warned that it could take time for oil and gasoline prices to normalize due to energy infrastructure damage and obstacles throughout the strait.
Despite a record release of oil reserves and a temporary pause on Russian energy sanctions, oil prices have continued to rise – raising fears that energy shocks could ripple across consumer prices and lead to a toxic mix of inflation and slow growth known as “stagflation.”
The International Energy Agency last week announced a historic release of 400 million barrels of oil reserves. The US said it would release 172 million barrels from its Strategic Petroleum Reserve.
Though Energy Secretary Chris Wright previously said gas would soon be back below $3 a gallon, he appeared to backpedal over the weekend.
“There’s no guarantees in wars at all,” Wright told ABC News on Sunday. “I can guarantee the situation would be dramatically worse without this military operation to defang the Iranian regime.”
As oil prices have skyrocketed over the past few weeks, small investors have poured money into exchange-traded funds with oil ties – with some analysts comparing the trend to meme stock frenzies like GameStop.
Net retail buying of oil ETFs jumped to a record $211 million last Thursday – above the previous record high during the pandemic-era swings in May 2020, according to Vanda Research.
