Watching oil prices yesterday was almost as exciting as discovering the stuff on your land. Crude oil prices reached $119 a barrel in the morning—surpassing $100 for the first time since Russia’s invasion of Ukraine sent prices soaring in 2022—then dropped back below the three-digit threshold after the Group of Seven’s energy ministers appeared ready to act and President Trump suggested the Iran war could end soon.
Prices hit the heights because Iran has choked off tanker traffic through the Strait of Hormuz after the US and Israel attacked. It’s estimated that daily production in the Middle East could fall by 9 million barrels per day by the end of the month. But:
- The G-7—which includes the US, Canada, France, Germany, Italy, Japan, and the UK—scheduled a virtual hang for this morning to discuss a possible coordinated release of their oil reserves. That news temporarily eased panic and sent prices down to $95.
- Prices fell even further from their morning heights yesterday evening after Trump said on Truth Social that the US would hit Iran “twenty times harder” if it stopped oil flows through the strait.
Keeping it 
about $100 barrels
Even though prices came back down yesterday, crossing the $100-a-barrel price point is significant, at least psychologically, for the market. Plus, war is unpredictable and Trump went back and forth in different remarks yesterday about whether the conflict would conclude soon.
In the event that the fighting does extend beyond March Madness and crude prices soar back over $100, GasBuddy says there’s an 80% chance gas will reach a national average of $4 per gallon this month. Gas prices in the US were averaging $3.48 per gallon yesterday—an increase of 50 cents in one week. And if oil prices stay higher for longer, lower- and middle-class Americans will feel the brunt more than anyone in this K-shaped economy, according to an economist who spoke to the Wall Street Journal.
Looking ahead…expect more volatility as the situation in the Middle East continues to change.—DL, AR
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