The price of oil surged Sunday after U.S. and Israeli strikes on Iran, which killed its supreme leader.<\/p>\n\n\n\n
U.S. crude oil soared more than 7%, while Brent, the international oil benchmark, surged 8% in early evening trading.<\/p>\n\n\n\n
Even before the weekend’s escalation, oil prices had risen 17% this year off President Donald Trump\u2019s ramped-up rhetoric against the Iranian regime. The Trump administration has also ratcheted up sanctions on Iran in recent months.<\/p>\n\n\n\n
Retail gas prices move about 2.5 cents for every $1 move in the price of crude oil, so already a 20 cent-per-gallon increase could be on the horizon. Price hikes at the gas pump could start as soon as Monday, GasBuddy analyst Patrick De Haan said.<\/p>\n\n\n\n
“I fully expect that by Monday night, you could credibly say that gas prices are being impacted by oil prices having gone up,” he said.<\/p>\n\n\n\n
\u201cIt won\u2019t be a spike,” De Haan said, but still warned that gas stations will likely start passing along price hikes this week.<\/p>\n\n\n\n
While Iran’s oil production is estimated to be less than 5% of global output \u2014 most of which goes to China because of U.S. sanctions \u2014 it has major influence over the Strait of Hormuz, a critical passageway for more than 20% of the world’s daily oil demand.<\/p>\n\n\n\n
A closure or restriction there can quickly rock the global oil market, and it would be among the worst-case scenarios for the oil market, longtime industry analyst Andy Lipow said Sunday.<\/p>\n\n\n\n
On Saturday and Sunday, at least six of the leading cargo shipping companies said they were halting or diverting ships that were originally set to sail through the key waterway.<\/p>\n\n\n\n
Stock futures also plunged, with futures that indicate where the S&P 500 will trade Monday dropping 1.1% and Nasdaq 100 futures sliding 1.2%. Dow futures dropped more than 530 points.<\/p>\n\n\n\n
Russell 2000 futures, which track smaller companies, declined more than 1.6%.<\/p>\n\n\n\n
The U.S. Dollar Index rose 0.4%, and the price of precious metals rose, with gold jumping nearly 2% and hitting $5,350, an indication that investors and traders are flocking to “safe haven” assets in the wake of the conflict.<\/p>\n\n\n\n
“The scale [of Iran\u2019s retaliation] has been a big, big surprise,” Jorge Le\u00f3n, head of geopolitical analysis at Rystad Energy, told NBC News on Saturday. “This is a totally different world from what the market was anticipating.”<\/p>\n\n\n\n
Earlier Sunday, eight oil-rich nations that are part of OPEC+ said they planned to increase production by more than 200,000 barrels of oil per day starting next month in a move aimed at calming markets.<\/p>\n\n\n\n
For prices to fall, the market will most likely need tensions to ease.<\/p>\n\n\n\n
“The trajectory of oil prices will ultimately depend on four variables,” JPMorgan Chase analysts said in a note Sunday. Those factors are how much supply is disrupted, how long a disruption lasts, whether supply from other sources can be mobilized quickly and what comes next.<\/p>\n\n\n\n
Crude oil may not be the only commodity affected.<\/p>\n\n\n\n
\u201cWhile much of the focus is on crude oil, Qatar is the second largest exporter of [liquified natural gas] behind the USA,\u201d Lipow wrote in a note. \u201cLNG tankers are also being diverted away from the region,\u201d he added. “A disruption in LNG would result in higher natural gas prices, especially in Europe.”<\/p>\n\n\n\n
Natural gas prices rose about 2% in early trading.<\/p>\n\n\n\n