The average price of gasoline is now at about $3.40 in the U.S. and the barrel price is at $100. But not for long, experts say.
Demand in the U.S. is still moderate, but prices are expected to climb should Iran, facing sanctions over its nuclear program, follow through on its threat to close the Strait of Hormuz, which could cut some 16% of global oil production from the market – a shortage notably worse than that created last year by Libya’s civil war, Patrick DeHaan, senior petroleum analyst at gas price reporting website GasBuddy.com, told CNNMoney.
Throw in some price speculation and concerns about recession in Europe, GasBuddy says, and prices in Chicago could hit $4.95 and hover around $4.55 in the New York metro area.
Other analysts believe that price increases will be significant but likely to be more modest, perhaps averaging $3.50 by the beginning of summer. Confrontation with Iran probably won’t escalate to a blockade, although prices likely will continue to be volatile, Cameron Hanover oil analyst Peter Beutel told CNNMoney.