\u201cThe market took that as, \u2018OK, the retaliatory measures by Iran are going to target military installations of the United States, not oil infrastructure,\u201d said Tom Seng, assistant professor of professional practice in energy at Texas Christian University\u2019s Ralph Lowe Energy Institute.<\/p>\n
Oil investors have been concerned Iran could react in a way that would somehow interrupt the oil supply from that country, Seng said.\u00a0<\/p>\n
Iran was the fourth-largest crude oil producer in OPEC in 2023, with 24% of oil reserves in the Middle East, according to the Energy Information Administration.\u00a0<\/p>\n
However, Iran\u2019s production has been limited because its oil sector has been subject to underinvestment and international sanctions for several years, according to an Energy Information Administration report.\u00a0<\/a><\/p>\n Outside of oil production, Seng said, there was also some concern that Iran could block oil traffic<\/a> in the Strait of Hormuz, the only sea passage from the Persian Gulf to the ocean.<\/p>\n \u201cThat would be a suicidal kind of thing,\u201d Seng said. \u201cYou would have a multinational response, including from China, because they have a vested interest in the freighters going through.\u201d\u00a0<\/p>\n Seng said investors were considering a \u201cworst-case scenario\u201d kind of thing and that drove prices up.\u00a0<\/p>\n Now, prices have gone the other way, which so far, looks good for consumers, he said.\u00a0<\/p>\n \u201cFor now, at least, it appears as though high oil prices will not occur and be sustained by this conflict,\u201d he said.\u00a0<\/p>\n While crude oil prices are trending down for the second straight week, the nation\u2019s average price of gasoline<\/a> has increased, rising 9.7 cents compared with a week ago, according to data from GasBuddy, a fuel and power consulting company. Prices in Texas increased 12 cents per gallon over the week, according to the data.\u00a0<\/p>\n \u201cWith Israel and Iran trading attacks over the past week, oil prices have continued to climb \u2014 and gasoline prices are following suit, rising at a pace we haven\u2019t seen since last summer,\u201d said Patrick De Haan, head of petroleum analysis at GasBuddy, in a statement.\u00a0<\/p>\n \u201cFor now, motorists should anticipate a continued steady climb in prices, with the national average likely to increase another 7 cents to 15 cents this week, while diesel could rise by 10 cents to 20 cents,\u201d he said.\u00a0<\/p>\n For the state\u2019s oil and gas industry, the fact that oil prices have dropped below the $70 a barrel threshold is problematic, Seng said.\u00a0<\/p>\n \u201cThat $70 a barrel is sort of the \u2018Goldilocks price,\u2019\u201d Seng said, referring to the price where most oil and gas companies can see a decent profit on their investments.\u00a0<\/p>\n \u201cNow we\u2019re flirting with a price per barrel under $70,\u201d he said. \u201cIf that sustains itself, you may start to see some impact, some mergers and that sort of thing. There\u2019s no doubt people in the industry are watching this closely because we\u2019re right on the tipping point.\u201d\u00a0<\/p>\n Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org<\/a>. \n\tRelated\n<\/p>\n Fort Worth Report is certified by the Journalism Trust Initiative<\/a> for adhering to standards for ethical journalism.<\/p>\n Republish This Story<\/p>\n
At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here<\/a>.<\/p>\n
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