U.S. Energy Secretary Chris Wright issued a warning on gas prices. Although he said that gas prices had peaked, he predicted that they might hover above $3 per gallon until next year.
Gas prices lifted the U.S. consumer price index levels in March. Assuming that prices do not fall, it will likely hurt Republicans in the midterms later this year. Markets might reward investors who took advantage of the monthly plunge in oil and gas integrated firms.
In the last month, Exxon Mobil (XOM) fell by 7%. ConocoPhillips (COP) peaked at over $135 and closed at $116.04 last week. Canadian Resources (CNQ), Occidental Petroleum (OXY), and EOG Resources (EOG) also broke down from their uptrend earlier this month. That sell-off, amid elevated tensions in Iran, does not make sense. Crude prices in Asian markets will rise as oil supplies fall to dangerous levels.
Time is on Iran’s side. The energy shortage could potentially lead to a drastic increase in products reliant on oil. That includes plastics, which are used nearly universally.
Energy Secretary Wright’s comment contradicts that of Treasury Secretary Scott Bessent. Bessent recently predicted that gas prices would fall to the $3/gallon range this summer.
Investors should listen to Wright, since he leads the Energy portfolio.
Last Friday, oil prices fell by around 9%, with Brent crude futures at $90.
