Oil prices may surpass $90 following Iran's attacks, but are expected to decline subsequently

Oil Market Volatility Amid Middle East Tensions

Oil prices are expected to experience significant fluctuations in the near term due to recent military actions involving the U.S., Israel, and Iran. However, experts believe that the market could stabilize relatively quickly following this period of uncertainty.

Analysts predict that crude oil, which closed last Friday at approximately $67 per barrel, may start the week trading at $90 or more. This anticipated surge comes as traders react to reports that Iranian forces have restricted movement through the vital Strait of Hormuz.

Despite the initial market reaction, industry observers suggest the situation may be more complex than it first appears. Here’s a breakdown of the key factors at play.

The Significance of the Strait of Hormuz

The Strait of Hormuz is a critical passageway for global energy, with about one-fifth of the world’s daily oil supply passing through it. Major oil exporters such as Saudi Arabia, Iraq, and the United Arab Emirates rely heavily on this route for their shipments.

Petroleum analyst Patrick De Haan notes that Iran’s claim of blocking the strait does not necessarily equate to a complete shutdown. He explains that a prolonged closure would likely prompt a coordinated response from regional powers and the United States to ensure the continued flow of maritime traffic, given the corridor’s importance to the global economy.

While markets are currently factoring in increased transaction costs and heightened volatility, a total closure is not widely anticipated. Should access to the strait remain restricted for an extended period, TD Securities analysts warn that oil prices could soar well above $100 per barrel.

Conversely, if safe passage is restored and hostilities subside, the risk premium could dissipate within weeks, according to TD Securities. Rob Thummel, a portfolio manager at Tortoise Capital, adds that if tensions with Iran appear short-lived, oil prices could return to the $60 range.

Thummel also highlights that the U.S. has become the world’s top crude oil producer, which helps cushion the impact of geopolitical disruptions on oil and gasoline prices.

Venezuela’s Role in Oil Supply

Although the United States has significant influence over Venezuelan oil production, this is not enough to offset the more than 3 million barrels per day produced by Iran, according to De Haan. He emphasizes that even under the most favorable conditions, it would take years—not weeks—for Venezuela to ramp up output to levels comparable to Iran’s exports.

A navy ship navigates the Strait of Hormuz, a crucial channel for global oil and gas shipments, on March 1, 2026.

How Will Gas Prices Be Affected?

According to a recent USA TODAY report, the average price of gasoline in the U.S. is expected to climb above $3 per gallon at the start of the week—the first time this year. Over the coming weeks, prices are projected to reach at least $3.10 to $3.15 per gallon.

This period also coincides with the typical seasonal rise in gas prices. Thummel advises that gasoline costs are likely to increase in tandem with crude oil prices, meaning a 10% jump in oil could result in a similar rise at the pump.