(MarketWatch) The death of an Iranian military leader in a U.S. airstrike has sent markets reeling. But U.S. consumers won’t feel the impact of rising oil prices immediately.
Qassem Soleimani, the leader of the foreign wing of Iran’s Islamic Revolutionary Guard Corps, was killed in an airstrike on Baghdad’s international airport Friday.
Crude oil prices jumped 3.42% to more than $63 on Friday morning, the highest level since April 2019. But one analyst suggested that oil prices could go as high as $80 even if a full-blown war between the U.S. and Iran didn’t materialize.
Historically, conflict in the Middle East has translated into higher prices at the gas pump for American drivers. In 1990, when the first Gulf War began, gas prices rose 11% over the previous year as a result of the conflict. And before that gas prices increased by almost a third between 1979 and 1980 as a result of the Iranian Revolution.
These days, however, the global landscape of oil production is very different in one major way: The U.S. is now one of the world’s largest oil producers. And that’s good news for Americans.
“We’ve added 7.5 million barrels a day of oil production versus a decade ago,” said Patrick DeHaan, head of petroleum analysis at GasBuddy, a Boston-based technology company that analyzes gas prices across the country. “That has been a paradigm shift in terms of the global demand and supply balance.”
However, if oil prices rise even more — and for a more extended length of time — U.S. oil producers will have a more difficult time keeping a lid on gas prices. Oil producers in the U.S. are already operating near full capacity, so if prices rise they would not be able to increase supply to bring prices lower.