Oil prices continued their upward spiral Wednesday, as Israel and Iran threatened more attacks on petroleum facilities, jolting markets and sending the cost of a barrel of crude to nearly $110.
The price spike threatens more pain at the pump for American drivers. A gallon of regular unleaded gas already averages $3.84 nationally, according to AAA — an increase of 32 percent from just a month ago, before President Donald Trump launched strikes on Iran alongside Israel.
Trump has made conflicting statements about how soon the war might end, and White House moves to ease oil price increases have had little effect. Analysts have steadily increased oil price forecasts.
Attacks on Iran’s South Pars gas field Wednesday fueled the surging oil prices and triggered threats from Tehran of strikes against energy infrastructure in the Persian Gulf. Qatar and Iran accused Israel of attacking facilities connected to South Pars, a large natural gas field; Qatar operates a part of the field to the north.
The strike on South Pars was “dangerous & irresponsible,” Qatar’s Foreign Ministry spokesman, Majed al-Ansari, said in a post on X.
On Wednesday, Trump tried to fight spiraling oil prices with a 60-day suspension of the Jones Act, which prohibits foreign vessels from shipping oil and gas between U.S. ports. That could increase the pool of ships that can move the fuels across the United States. But analysts say the move is largely symbolic and will ease gas prices by only a couple of pennies at most.
“President Trump’s decision to issue a 60-day Jones Act waiver is just another step to mitigate the short-term disruptions to the oil market as the U.S. military continues meeting the objectives of Operation Epic Fury,” White House press secretary Karoline Leavitt said in a statement.
The U.S. shipping industry immediately protested the move, warning it may be illegal.
“We are deeply concerned about this 60-day, broad waiver being abused and unnecessarily displacing American workers and American companies,” the American Maritime Partnership, an industry group, wrote in a statement. “This waiver will not reduce gas prices. The maximum potential impact of domestic shipping on the cost of gasoline nationwide is less than one penny per gallon.”
The White House suspension of the Jones Act appeared to have little impact on oil markets. The cost of Brent crude, the global benchmark, was up more than 6 percent by late morning Wednesday, after Iran threatened to strike oil facilities in Saudi Arabia, the United Arab Emirates and Qatar. The Islamic Revolutionary Guard Corps declared the facilities “legitimate and prime” targets, according to Iranian state media.
“Gulf oil export infrastructure remains in Iran’s crosshairs, with risk premiums poised to widen if struck,” Capstone, a market research firm, wrote in a note to clients Wednesday.
Analysts at Citi expect Brent prices to soar as high as $120 in the next several days, which could push the average cost of a gallon of gas at the pump past $4.
Iran’s latest threats come after it has already damaged major production facilities and continues to force the effective closure of the Strait of Hormuz, a choke point for roughly one-fifth of the world’s oil. The inability of the U.S. military to guarantee safe passage through the strait has sent oil markets into turmoil.
Prolonged closure of the strait is causing cascading disruptions to the world’s oil supply. Persian Gulf states have no place to send the crude or natural gas they are producing, as ships sit idle at sea full of cargo and storage tanks are fast reaching capacity. Oil companies are being forced to ramp down production and consider shutting down some facilities altogether.
Those facilities cannot be turned back on easily. Ramping back up to full production can take weeks, moving analysts to forecast longer and more acute disruptions to oil prices amid no signs of the Strait of Hormuz reopening.
Rising oil prices and the geopolitical strife will take a toll on the American economy, especially as prices at the pump and for airline flights rise. That comes at a tenuous time for the Trump administration, which has staked its economic policy on affordability. But consumers are already feeling squeezed, and energy prices are primed to affect inflation.
“The net of the oil shock will still be some downward pressure on spending and employment and upward pressure on inflation,” Fed Chair Jerome H. Powell said Wednesday, after the central bank announced it would leave interest rates unchanged. He cautioned that it was still unclear what the larger effect on the economy would be.
The Trump administration on Wednesday also issued a waiver that authorizes U.S. firms to do business with Venezuela’s state oil company, Petróleos de Venezuela, lifting sanctions that made it difficult for the country to export its crude. The move is aimed at allowing Venezuela to boost sales after a years-long blockade.
Last week, Trump temporarily lifted sanctions on Russian oil already at sea in an effort to ease global prices. The action, widely condemned by lawmakers in the U.S. and Europe because it will help Russia generate money for its war against Ukraine, appears to have done little to mitigate the economic fallout from the closure of the strait.
Before the sanctions on Russia were lifted, the U.S. and other governments agreed to release 415 million barrels of oil from emergency reserves. That action also failed to stem the upward trajectory of oil prices.
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