Speculators bumping gas prices

LONDON - The price of oil surged Jan. 3 on concerns that Iran might respond to the killing of its top general by the United States military by disrupting global supplies of energy from the Mideast. If sustained, the rise in oil prices could lead to more expensive car fuel, heating and electricity bills, stifling the global economy. The killing prompted expectations of Iranian retaliation. During months of tension with the U.S., Iran has threatened the supply of oil that travels from the Persian Gulf (via the Strait of Hormuz) to the rest of the world. About 20% of crude traded worldwide goes through the Strait, where the shipping lane is only 2 miles wide and tankers have come under attack this year. The international benchmark for crude oil jumped 3.7% to $68.70 a barrel in London trading. The U.S. contract was up 3.6% to $63.36. About 80% of the crude oil that travels through the Strait of Hormuz goes to Asian countries. In the U.S., crude oil accounts for just over 50% of the price of gasoline. In the longer term, the rise in crude oil prices could be limited by the fact that the U.S. energy market is flush with oil while demand has softened as major economies have slowed. Crude-producing countries (like the United States) have been pumping oil at a high rate. (Source: The AP 01/03/20) Gulf Coast Note: Oil speculators have already begun raising the price of gasoline at the pump, despite the fact that the U.S. energy market is flush with oil. https://www.nola.com/news/business/article_f8085b4c-2e4c-11ea-901a-632fa3f5aee2.html Markets have become so accustomed to a surplus of oil in the global market that they are not as worried about tensions in the Persian Gulf region as they once were. A big oil price increase would have a much more modest impact on the United States economy than in the past, though it could hurt other countries like China and India more. (Source: NY Times 01/08/20)