US Oil Prices Rise Again as Iran War Eliminates Buffer in Global Oil Supply

The global oil supply buffer has been all but eliminated by three weeks of the Iran war, and US oil prices are rising again as Monday approaches. Analyst Patrick De Haan has forecast pump prices of $3.80 to $3.85 per gallon, acknowledging that $4 gasoline remains a possibility. The systematic erosion of global supply reserves has left markets highly vulnerable to any new military escalation or shipping disruption.
Before the US-Israel campaign against Iran began on February 28, the global oil market had sufficient supply buffer to absorb modest disruptions. Three weeks of sustained attacks on oil infrastructure and shipping lanes have stripped away that buffer, pushing the national gasoline average 23% higher from below $3 to $3.70 per gallon. The complete consumption of the supply buffer means that any new disruption now translates immediately and directly into price increases at the pump.
The US strike on Kharg Island on Friday was a significant blow to Iran’s oil export capacity and to the global supply buffer that remained. Iran’s ongoing blockade of the Strait of Hormuz, which handles roughly one-fifth of global daily oil supply, continues to prevent any rebuilding of global supply reserves. Brent crude traded between $103 and $106 per barrel Monday, while US crude fluctuated near $94 after briefly reaching $100 on Sunday.
California consumers continue to bear the heaviest domestic burden, with state averages above $5 per gallon and some Los Angeles stations pricing above $8. Diesel for commercial transport could reach $5.15 per gallon nationally. Oil industry executives from Exxon, Conoco, and Chevron have all raised urgent supply concerns with White House officials, with Exxon CEO Darren Woods highlighting specifically how speculative traders amplify the market impact of physical supply shortfalls.
US stocks opened the week with modest gains, the S&P 500 rising approximately 1% following a brief oil price retreat. Oil company shares have reached record highs since the conflict began. With the global supply buffer effectively exhausted, US oil prices will remain highly sensitive to any new developments in the military conflict or the Hormuz blockade.