NEW YORK — Rising tensions in the Middle East have pushed oil prices up 19 percent over the past three weeks and are leading to a rise in prices at the gasoline pump.
Since the start of July, average gasoline prices in the U.S. have climbed 11 cents to $3.44 per gallon. Pump prices are expected to creep higher in the coming weeks, and they aren’t likely to fall back to their June low of $3.33 for the rest of the summer, analysts say.
Crude oil rose $2.79, about 3 percent, to $92.66 per barrel Thursday, its highest level since mid-May. The price has risen $15 per barrel since June 28, when oil hit a low of $77.69.
The oil market is responding to a series of events in recent days that have raised concerns – yet again – that Iran will try to block oil shipments through the Strait of Hormuz, a narrow waterway in the Persian Gulf through which one-fifth of the world’s oil travels every day.
Iran raised this threat late last year after the U.S. and Europe announced sanctions designed to crimp Iran’s oil sales, sending oil soaring above $100 per barrel. Western nations are trying to force Iran to abandon what the West says are efforts to develop a nuclear weapon.
Tensions eased, and oil prices fell, when Iran agreed to enter negotiations over its nuclear program.
In the past few weeks, though, those negotiations appeared to have failed, and Iran said it has devised a specific plan to block oil shipments. Then, on Wednesday, seven Israelis were killed in a suicide attack in Bulgaria. Israel blamed Iran for the attack and vowed to strike back.
“It’s raised the fear quotient,” said Tom Kloza, the chief oil analyst at the Oil Price Information Service.
The rise won’t likely be dramatic – or long-lived, however. The growth in demand for oil has weakened in recent months as the economies of the West have sputtered and China’s economic growth has slowed. Also, oil supplies remain high.
Kloza doesn’t see gasoline rising much beyond $3.50 for the rest of the summer.
After that, he says, gasoline prices could fall sharply as supplies increase and refiners switch to cheaper winter blends of fuel.
In other energy trading in New York, natural gas rose 2.6 cents to close at $2.935 per thousand cubic feet. Heating oil rose 7 cents to close at $2.95 per gallon and wholesale gasoline rose 6 cents to close at $2.94 per gallon.