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CALGARY — Global oil market uncertainty, including tensions around the Strait of Hormuz, is contributing to higher gasoline prices even far from the source of potential disruptions, according to analysis by Patrick De Haan, VP, Petroleum Analysis & Media Relations with GasBuddy.com
De Haan says oil is one of the most globally integrated commodities, with roughly one in five barrels moving through the Strait of Hormuz each day. Any threat to that flow can push prices higher, even before actual supply is affected, as markets respond to risk and future expectations.
Higher crude prices typically translate into increased gasoline costs, as refiners and retailers adjust to rising replacement costs. Fuel prices at the pump are based not on existing inventory, but on what it will cost to restock, leading to quicker increases when markets rise.
De Haan notes oil prices are set on a global market, meaning supply disruptions in one region can shift demand elsewhere. Countries reliant on Middle Eastern oil may seek alternative sources, increasing competition for available supply and driving up prices worldwide.
Even in countries with strong domestic production, including the United States, pricing remains tied to global benchmarks. Oil producers sell at prevailing international rates, and refinery needs for different crude types can require continued imports.
Market dynamics are also influenced by futures trading, where prices reflect expectations of future supply and demand. As a result, geopolitical developments can quickly affect current prices, even if physical oil shipments are weeks or months away.
De Haan says gasoline prices respond rapidly to global events, with uncertainty and perceived risk often playing as large a role as actual supply changes.
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