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Oil prices have spiked and fallen drastically because of the war in Iran, which has in turn led to higher gas prices here in the United States. We don't get our oil from Iran, so why is it affecting us?
Market analyst Phil Flynn says the root issue is that oil is a global commodity, so if supply becomes limited anywhere in the world, it affects pricing all over the globe.
He explained: “The Strait of Hormuz moves 20–25% of the daily supply of oil, so if that gets shut down, it has ramifications far away.”
One of the obvious ramifications is that nations who typically would have gotten their oil out of the Strait of Hormuz now have to turn to nations like the United States for their supply. Flynn said: “When you create a void, it gets filled somewhere else. For example, the prices are higher in Europe, so that's going to attract barrels from the United States.”
There is some good news here, however. Flynn says that on top of giving the United States more control over the global oil supply, this will also enable and encourage investment in oil and gas infrastructure—particularly refining. We’re already seeing that begin to play out, with President Trump announcing the first new development of an oil refinery in the United States in 50 years.
That will in turn lead to lower prices in the United States long term.