Renewed tensions in Iran push oil, gas prices higher
BY FRANCINE KNOWLES Business Reporter firstname.lastname@example.org July 3, 2012 3:18PM
Hand at the pump at BP station, 35th and King Drive as average gas prices reaching a record high in the Chicago area Monday, March 26, 2012. | FILE John H. White~Sun-Times.
Updated: August 5, 2012 6:25AM
Average gasoline prices in the Chicago area, which had been falling for weeks, rose 4 cents a gallon Tuesday amid heightened tensions with Iran that pushed oil prices up more than 4 percent and that could portend even higher prices in coming weeks.
It was the first increase in gas prices in the Chicago area since June 11.
The average price of gas in the Chicago area was $3.65 a gallon Tuesday, up from $3.61 a gallon Monday, according to AAA Chicago, Wright Express and the Oil Price Information Service. But the price still was 32 cents a gallon cheaper than a year ago and 30 cents cheaper than a month ago.
Tuesday’s increase came as Iran renewed threats to block a vital Middle East shipping route in the wake of Europe’s Iranian oil embargo that took effect Sunday. The embargo was put in place due to Iran’s nuclear program.
The price rise also comes amid a New York Times report that the U.S. has increased military reinforcements in the Persian Gulf and as Iran has launched war games in the region.
“The concern isn’t that Iran might sink a ship,” said Michael Lynch, president of Strategic Energy & Economic Research. “It’s for a longer conflict that will keep insurers wanting to stay away from the Gulf, which would cause a disruption of shipping that could last a few weeks. That’s a major disruption of the world’s oil.”
Combined with a big gain on Friday, oil has risen by nearly $10 per barrel in less than a week.