• The United States and Israel have launched an attack on Iran.
  • The country responded by attacking US allies in the region.
  • Oil prices have jumped and drivers will end up paying more.

A sudden escalation in the Middle East is already rippling through global energy markets. Over the weekend, the United States and Israel launched a surprise attack on Iran, killing a number of high-ranking officials, including Supreme Leader Ayatollah Ali Khamenei.

Following the attack, Iran retaliated by launching drones and missiles at US allies and military bases. While the situation is still unfolding, the country reportedly targeted Aramco’s Ras Tanura refinery in Saudi Arabia.

More: Gas Prices Drop To Levels America Hasn’t Seen Since 2021

Reuters reports two drones were intercepted at the facility, but debris caused a “limited fire.” The facility has reportedly been shut down, which is the latest sign that there will be turbulence in the oil market.

Crude Oil Reacts

The national average price for a gallon of gasoline is $2.997 and that’s down from $3.098 a year ago. However, prices were already expected to rise as refineries are about to switch over to summer blends, which AAA says contain “pricier additives to help reduce evaporation during warmer months.” This means consumers can expect a double whammy at the pump.

The war in Iran has caused prices of West Texas Intermediate Crude to jump skyward. Prices were hovering around $65.34 on February 27, but they’ve climbed to $70.78 as of this writing, which is down slightly from a peak of $73.06 earlier today.

That’s an 8.3% increase in just a matter of days and NBC reported that “retail gas prices move about 2.5 cents for every $1 move in the price of crude oil.” This means consumers can expect to pay an extra 20 cents per gallon.

Will Oil Flows Be Disrupted?

While Iran supplies less than 5% of the world’s oil, the country is located near the Strait of Hormuz, which is a major pathway for oil tankers. Forbes reports that three ships have already been attacked and Iranian forces have reportedly declared the strait is closed.

This has insurance companies on edge and some policies have reportedly been canceled, while others have seen prices rise. The Financial Times said that a policy for a $100 million vessel could climb by $125,000 per voyage. The increased cost would ultimately be passed on to consumers.

Of course, what happens next is the big question. Continued instability, or further attacks, could keep energy markets on edge in the days and weeks ahead.