LONDON, July 8 — A $10 per barrel increase in the price of oil typically raises U.S. gasoline prices by $0.25 per gallon, according to data from the U.S. Energy Information Administration. That mechanism is now in focus as analysts assess the trajectory of crude markets. The record shows that oil prices have historically spiked during Middle East crises.
The 1973 Arab oil embargo drove prices from $3 to $12 per barrel. The 1990 Iraqi invasion of Kuwait pushed prices from $16 to $36 per barrel.
In 2020, the COVID-19 pandemic caused a brief drop to negative prices. As of March 30, 2025, Brent crude stood at $78.50, up 5.8% from $74.20 on March 29. West Texas Intermediate was at $74.20, up 5.9%.
Production and Reserves
The U.S. Energy Information Administration reported that U.S. oil production averaged 13.2 million barrels per day in 2024, a record high. The U.S. Strategic Petroleum Reserve holds 375 million barrels as of March 2025, down from 638 million in 2020. Iran’s oil exports in 2024 averaged 1.5 million barrels per day, generating about $45 billion in revenue.
Sanctions could reduce that to 0.5 million barrels per day.
OPEC’s Cushion
OPEC’s spare production capacity is about 4 million barrels per day, primarily in Saudi Arabia. On the timeline, the key question is whether Saudi Arabia and other OPEC members will deploy that spare capacity to offset potential Iranian losses. The record shows that previous Middle East crises have tested the cartel’s willingness to act as a swing producer.
The relationship between crude prices and consumer costs is direct. A $10 per barrel increase in oil prices typically raises U.S. gasoline prices by $0.25 per gallon, according to the data.
The 2020 pandemic-era drop to negative prices remains an outlier in the historical record. The 1973 embargo, the 1990 invasion, and the current sanctions environment all point in the same direction: supply constraints push prices higher. What to watch next is whether OPEC’s spare capacity — the 4 million barrels per day primarily held by Saudi Arabia — will be deployed.
The answer will determine whether the market absorbs a potential Iranian export reduction or whether prices climb further.
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