Gas Prices May Rise as US-Iran Tensions Threaten Oil Supply Disruptions

Oil prices reached seven-month peaks Thursday as diplomatic talks between the US and Iran continue in Geneva. Market analysts warn that any military conflict could disrupt Middle East oil supplies and drive prices higher, potentially impacting gas costs for Delaware drivers.

Oil markets surged Thursday as diplomatic negotiations between the United States and Iran continued, with crude prices reaching their highest levels in seven months amid concerns over potential supply disruptions.

Brent crude oil traded at $71.12 per barrel, gaining 27 cents or 0.3% early Thursday morning. West Texas Intermediate crude increased 23 cents to $65.65 per barrel, representing a 0.4% rise.

Both oil benchmarks climbed to their strongest positions since late July this week as the United States has deployed military assets to the Middle East region while pressing Iran to abandon its nuclear weapons and ballistic missile development programs.

A third round of diplomatic discussions is scheduled for Thursday in Geneva, with US representatives Steve Witkoff and Jared Kushner meeting with Iranian officials.

Toshitaka Tazawa, a market analyst at Fujitomi Securities, explained that “Investors are focusing on whether military conflict will be averted in the U.S.-Iran negotiations.”

According to Tazawa’s analysis, even a limited military engagement could push West Texas Intermediate crude temporarily above $70 per barrel before falling back to the $60-65 range. However, a prolonged conflict could severely impact oil shipments from Iran, which ranks as the third-largest crude producer within OPEC, along with other Middle Eastern exporters.

During his State of the Union address Tuesday, President Donald Trump outlined his position on potential military action against Iran, declaring he would prevent what he called the world’s leading terrorism sponsor from obtaining nuclear weapons.

Iran’s Foreign Minister Abbas Araqchi responded Tuesday that an agreement with the United States was “within reach, but only if diplomacy is given priority.”

Saudi Arabia has begun ramping up oil production and exports as a precautionary measure in case US military strikes against Iran disrupt regional supplies, according to two sources familiar with the contingency planning.

OPEC+, the alliance of oil-producing nations including OPEC members and partners like Russia, is considering increasing output by 137,000 barrels daily for April, three knowledgeable sources revealed. This potential increase comes as the group prepares for summer demand peaks while tensions between Washington and Tehran boost prices.

However, price increases faced some resistance after US crude stockpiles jumped by 16 million barrels last week – the largest weekly increase in three years, according to Energy Information Administration data released Wednesday. This massive inventory build far exceeded analysts’ predictions of a 1.5-million-barrel increase.