Crude oil prices have spiked and dropped twice in the past six days. The first spike occurred last Friday following a U.S. drone strike in Baghdad, which killed Iran’s Major General Qassem Soleimani. Prices spiked again on Tuesday when over a dozen missiles were launched by Iran at military bases in Iraq that house American soldiers in retaliation for the drone strike. Domestic crude prices saw immediate gains with the announcement of both events. Crude prices spiked as high as $65.55 in after-hours trading on Tuesday, but price increases have since pulled back with WTI closing at $59.61 on Wednesday.

As the market continues to weigh the impact and risk of additional retaliatory actions that could lead to further escalation of tension in the region, WTI prices will likely continue to fluctuate. Wholesale gas prices have also fluctuated, causing a minimal impact on the national average. Since Monday, the national average for a gallon of regular unleaded gasoline has increased by two cents to $2.60. While there is still clear geopolitical tension, there is no immediate threat to crude supply domestically or globally that can support a sustained increase to crude oil prices or domestic wholesale gasoline prices.

The Energy Information Administration (EIA) released new gasoline data that showed demand declined last week to 8.13 million b/d from 8.96 million b/d during the previous week. Additionally, EIA’s weekly report showed that total domestic gasoline stocks grew substantially by 9.1 million bbl, bringing the current level to 251.6 million bbl. Typically, low demand amid rising gasoline stocks would put downward pressure on pump prices, but given the current tension between the U.S. and Iran, gas prices are seeing fluctuation, though minimal.