'Chill out': Gas prices not spiking due to Iran attack, but that could still change

Oil prices briefly surged Tuesday night after Iran fired missiles at U.S. and coalition troops at two Iraqi bases, retaliating for the American killing of a top Iranian general. But don’t expect the attack to translate into a big spike in gas prices. 

At least not yet.

The price of oil, which is refined into gasoline, spiked more than 4% to top $65 for a short period as traders absorbed news of the retaliatory attack Tuesday night. But the commodity gave up most of those gains and was up only 1.3% shortly after 10 p.m.

The impact on gas prices for Americans is expected to be relatively muted. Tensions over the prospect of a wider conflict had already sent oil higher in recent days before it settled down, leading oil analysts to project a slight increase in gas prices.

Iran attack fallout: Asia stocks tumble, Dow futures plunge 350 points after Iran fires missiles at US forces in Iraq

Patrick DeHaan, head of petroleum analysis for fuel-savings app GasBuddy, said Tuesday night that he continues to expect the average national price of gas to rise about 5 cents to 10 cents per gallon in the coming days.

But he said he does not expect a major increase under the premise that the attack may have been measured to reduce the likelihood of war or a protracted standoff.

“Everyone freaks out the moment the attack happens,” DeHaan said. But “you step away, and this could be the beginning of the end.” 

The initial “panic” over the possibility of a price spike is already giving way as people “chill out” and recognize that the effect may not be widespread, he added.

That said, any further escalation of the conflict in the form of a severe attack by the American military on Iranian soil could trigger a genuine spike in prices, DeHaan said.

“There’s a real danger here that can’t go understated,” DeHaan said. “Oil markets are obviously very on edge that the two sides continue to escalate left and right.”

One reason why the conflict has not yet lead to a significant increase in gas prices is that the world has been flooded with new sources of oil in recent years, particularly from the U.S.

What’s more, Iran is subject to severe sanctions and is unable to export its oil to much of the world, which limits the country’s impact on the petroleum markets. What traders mostly fear is the possibility that Iran will move to block oil supply routes or attack oil infrastructure in other countries.

For now, though, the increase in gas prices tied to the Iran situation is “a blip on the radar compared with Hurricane Harvey and Hurricane Katrina,” both of which caused national spikes at the pump, DeHaan said.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

This article originally appeared on USA TODAY: Iran attack: Gas prices likely won’t spike barring further escalation