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Gas Price At Pump Could Rise Moderately Following Strikes On Saudi Facilities

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Gas Price At Pump Could Rise Moderately Following Strikes On Saudi Facilities

A drop in oil production caused by a weekend drone attack on Saudi oil facilities is likely to push U.S. gasoline prices higher, industry analysts said as crude prices surged Monday.

Analyst: No Major Uptick Expected 

The good news for American consumers is that prices at gas pumps were fairly low going into the weekend. AAA estimates the nationwide average gas price was just under $2.60 per gallon over the weekend. Prices have been falling at the pump for several weeks.

Later this week, motorists are likely to see prices edge up, Patrick DeHaan, head of petroleum analysis for GasBuddy, said in a statement.

“Motorists should not expect a sudden and major uptick in gas prices [but] there may be a minor impact beginning mid-week and continuing until Saudi Arabia's state-owned oil company, Aramco, is able to restore all production,” DeHaan wrote.

Tom Kloza, an analyst with the Oil Price Information Service, told USA Today that a $5 to $10 increase in the price of a barrel of oil would translate into a 10 cent to 24 cent increase in the price for gas, diesel and jet fuel.

Saudi Stability 'No Longer Guaranteed' 

Economists will closely watch U.S. gas prices: the strength of the American economy in recent months has been bolstered by strong consumer sentiment, and it could be dampened if fuel prices rise significantly.

The Saudi government has said it is working to quickly restore the facilities and resume normal production.

“However, even after oil production levels return to normal, there is an undeniable factor that will now forever impact oil prices- and that is that Saudi Arabia's reliability and stability is no longer guaranteed,” GasBuddy’s DeHaan said.

“And this missile strike is evidence that perhaps one of the world's most stable oil producers may no longer be seen as stable as they were prior to this event.”

The attack comes as U.S. gas prices were falling, in part because of a switch to winter gasoline.

Brent crude oil prices were up more than 10% at the time of publication Monday.

President Donald Trump tweeted that if necessary, he will authorize release of fuel from the nation’s strategic reserve, though analysts also said price spikes aren’t likely to be severe, with the U.S. being less reliant on Saudi oil than it once was.

The west coast is more susceptible. A large percentage of the oil exported to the United States goes to refineries in California, which rely more heavily on the Saudi oil than on domestic sources.

Related Links: 

Oil Prices, Stocks Pump Higher After Drone Strike Cripples Saudi Oil Supply

3 ETFs For What Could Be A Wild Day In The Oil Patch

Posted-In: gas GasBuddy Oil usa todayNews Commodities Global Markets Best of Benzinga

 

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