Iran strikes jolt oil markets: Will Long Island gas prices rise?

The market-shaking effects of U.S. military strikes on Iran this weekend have already pushed up crude oil prices — a move that could translate into higher gas prices on Long Island within days, local experts said.

Military strikes on Iran rattled global markets Monday, with U.S. futures and markets in Europe and Asia falling as energy prices surged, according to The Associated Press. Futures for the S&P 500 and the Dow Jones Industrial Average each fell about 1%.

Local experts said U.S. crude oil supplies are unlikely to be disrupted.

“The first thing to know is that our crude oil supplies are insulated from any disruptions that might happen in the Middle East,” said Robert Sinclair Jr., senior manager of public affairs at AAA Northeast. “The U.S. is the No. 1 producer of crude oil in the world, making 11.5 to 12 million barrels per day.”

But prices have already climbed. While supply may not be affected, crude oil trades on a global market. That means U.S. consumers are still subject to price increases driven by overseas instability.

Crude oil prices rose to $72.43 per barrel from $65 last week, Sinclair said.

On average, a $10 increase in the price of a barrel of crude translates to roughly a 25- to 30-cent increase per gallon at the pump, he said.

Sinclair noted that the national average price for gasoline is about 11 cents higher than a week ago, though much of that increase reflects the seasonal shift to more evaporation-resistant summer gasoline blends.

On Long Island, where the switch to summer blends does not typically occur until April, prices have remained comparatively lower.

Nationally, the average price per gallon is $2.99. On Long Island, the average is $2.87, compared with $2.86 a week ago and $2.83 a month ago, Sinclair said.

Although it can take 20 to 30 days for higher crude prices to filter through to consumers, Sinclair cautioned that some retailers may raise prices sooner in anticipation of increases.

“You cannot discount the opportunism of the retailers, especially when everyone is expecting gas prices to go up,” he said. “Unscrupulous retailers can make the price go up overnight.”

The conflict could disrupt oil supplies from Iran and elsewhere in the Middle East, the AP reported. Attacks in the region — including on two vessels traveling through the Strait of Hormuz, the narrow mouth of the Persian Gulf — have constrained oil exports.

“Roughly one-fifth of global oil and LNG (liquefied natural gas) flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system,” Stephen Innes of SPI Asset Management said in a commentary.

Prolonged disruptions to oil flows through the Middle East would have “huge implications for oil and LNG and every market everywhere if it occurs,” RaboResearch Global Economics & Markets said in a report. “Energy is an input to all production.”

Iran exports roughly 1.6 million barrels of oil per day, mostly to China. If those exports are disrupted, China may need to seek supply elsewhere — another factor that could drive global energy prices higher.

Check back for updates to this developing story.