NEW YORK (AP) — Rising tensions in the Middle East have pushed oil prices up 19 percent over the past three weeks and are leading to a rise in prices at the gasoline pump.
Since the start of July, average gasoline prices in the U.S. have climbed 11 cents to $3.44 per gallon. Pump prices are expected to creep higher in the coming weeks, and they aren't likely to fall back to their June low of $3.33 for the rest of the summer, analysts say.
Crude rose $2.79, about 3 percent, to $92.66 per barrel Thursday, its highest level since mid-May. The price has risen $15 per barrel since June 28, when oil hit a low of $77.69.
The oil market is responding to a series of events in recent days that have raised concerns — yet again — that Iran will try to block oil shipments through the Strait of Hormuz, a narrow waterway in the Persian Gulf through which one-fifth of the world's oil travels every day.
Iran raised this threat late last year after the U.S. and Europe announced sanctions designed to crimp Iran's oil sales, sending oil soaring above $100 per barrel. Western nations are trying force Iran to abandon what the West says are efforts to develop a nuclear weapon.
Tensions eased, and oil prices fell, when Iran agreed to enter negotiations over its nuclear program.
But in the past few weeks, those negotiations appeared to have failed, a U.S. Navy ship fired on a boat in the Persian Gulf and Iran said it has devised a specific plan to block oil shipments.
Then, on Wednesday, seven Israelis were killed in a suicide attack in Bulgaria. Israel blamed Iran for the attack, and vowed to strike back. Iran has denied involvement.
"It's raised the fear quotient," said Tom Kloza, chief oil analyst at the Oil Price Information Service. "This was more than just talk and taunting."
If oil buyers worry that oil will soon be in short supply, they buy oil futures contracts to lock in the price as insurance against future price spikes. Those purchases drive up benchmark oil prices and can eventually lead to higher prices at the pump.
Brent crude, which is used to benchmark the oil bought by most U.S. refineries, has jumped 21 percent in about a month. On Thursday Brent rose $2.64 to $107.80. Brent hit a low of $89.23 on June 22.
Brent would be most affected by a disruption in the Middle East because it is used to price seagoing crude that competes with crude shipped through the Persian Gulf. Also Brent, which is priced in London, has been pushed higher by lower oil production in the North Sea.
Further increases are possible over the next few weeks, a development drivers are unlikely to welcome.
"It's going to translate to upward pressure at the pump," said Jim Ritterbusch, an independent oil trader and analyst.
But the rise won't likely be dramatic — or long-lived. The growth in global demand for oil has weakened in recent months as the economies of the West have sputtered and China's economic growth has slowed. And oil supplies remain high because output has risen in Saudi Arabia, Libya, the U.S. and elsewhere.
"There's stagnant demand, and lots of supply," said Judith Dwarkin, chief energy economist at ITG Investment Research.
That leads analysts to think that prices won't skyrocket unless supplies are disrupted by Middle East violence or a hurricane in the Gulf of Mexico.
Kloza doesn't see gasoline rising much beyond $3.50 for the rest of the summer. After that, he says, gasoline prices could fall sharply as supplies increase and refiners switch to cheaper winter blends of fuel.
In other energy trading in New York, natural gas rose 2.6 cents to close at $2.935 per thousand cubic feet. Heating oil rose 7 cents to close at $2.95 per gallon and wholesale gasoline rose 6 cents to close at $2.94 per gallon.
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This Week’s Celebrity Instagrams (10/15-10/21)
31 photos Launch gallery
1. Just a NY girl with BIG dreams....
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2. HAPPY CHILDREN=QUALITY PARENTING. We don't always see eye to eye on everything and that's normal. We're human beings. But we come together and do it right for what's important, the kids. We are not enemies, we are parents. And we are parents 1st. S/O to @monyettashaw for making Mason's bday memorable. S/O to @itscrystalsmith at home taking care of our other lil' Prince. ❤️❤️❤️ THIS IS WHAT CO-PARENTING LOOKS LIKE. #Blessed #Happy #AboveTheDrama #BiggerThanUs
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3. So happy to finally be able to share with you all that I’m the new Global Brand Ambassador for @Revlon! Follow my day on RevlonSnaps. Yay! Choose Love, Everybody! #RevlonXCiara #chooselove #ad
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4. Glam on point!!!@makeupbymotoko & @shaylinjoneshair #easybreezy @lifetimetv #beachesmovie #january2017 😘
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5. ✨True love ✨📸: @jessiemarrerophotography
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7. Today was not easy..but by the grace of God we all got through it. Words cannot express our gratitude for all of your Prayers, Positive thoughts and Support for us throughout the years. Tommy will be missed but most certainly never forgotten...And PLEASE don't ask "Where's Martin?.." he was there too...just not in this picture. Lol! God bless you all.. #LoveConquersAll #MartinShow
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9. West coast get ready for #RockyHorror. I will be live tweeting again. #letsdothetimewarpagain
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10. #THEKEYS pre order yours now ... Available everywhere #NOV22 #WeTheBest 🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑🔑
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11. We about to ROCK at #KCABlackBall!! All for our life-changing effort to end 🌎 AIDS.
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12. Today's #SNAPJACK is brought to you by @yazzthegreatest 😂😂😂💋💋💋
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13. Damn girl you kinda old to be headed to the Go Go. You coming in at the age they leaving. LMAO
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14. Daddy daycare B-Boxin with @acewellstucker @shopraisingace
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15. #FBF Naviyd & URV "LIL MONSTERS"
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16. HAPPY BIRTHDAY TO ONE OF THE BIGGEST LEGENDS IN OUR HIPHOP HISTORY! @snoopdogg CONTINUED BLESSING AND LOVE FAMILY!!!!! REAL OG!
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17. Thank you for a beautiful night VSU! Let's do it again! #HOMECOMING
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18. Had a great time this morning with my familia Erica, Griff & Truth!!
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19. Check out my interview on @essence facebook live. #inmyownwords #nycpromo #day2
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20. #She💋 #tbt #TheCoveAtTheAtlantis #DawgPawsAndAll
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21. Bae #retailtherapy
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22. Why me and @coryhardrict got the same pose... and notee... new mouth #naked
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23. When my husband is my personal 'hype-man'! it kills me every time! 💜😂 #WHATNOW #lostfiles📷
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24. Diggy Simmons
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25. Hand full of @jacquieaiche 💙💎💍 @esnail_la 💅🏾
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26. SuperSoulers! You can watch my interview with Carl Lentz live from my Facebook page, tomorrow at 11a ET| 8a PT. #SuperSoulSunday
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27. 💋 .. When the friendship is easy like Sunday morning. ☀️
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28. Sunday mornings are the best........... hugs and cuddles with my angel
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29. #huggar16 #hellohuggars
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30. My gym is everywhere!.. #RnBMoney #TheGeneral 📸: @twelvepastseven
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31. Nothing I would rather be doing... Rocko setting up our movie, Romelō working on a puzzle & Laiyah singing and sharing all she's learning at school... I'm so grateful for the joy they've brought into my life ... Praying for peace , joy & love in the home of EVERY family ♥️ #HeadScarfPJSunday LOL 😂
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