Gasoline prices are on the rise, inching closer to the $4 threshold as oil futures surge amidst escalating conflict in the Middle East. According to AAA data, the national average at the pump has surpassed $3.91 per gallon, reaching its highest level since 2022. Prices have steadily increased over the past weeks, rising by $0.98 from just one month ago. At this rate, experts predict that prices could hit $4 per gallon in the coming days.
“I do believe it’s looking like a strong possibility right now,” said Patrick De Haan, head of petroleum analysis at GasBuddy, in an interview with Yahoo Finance. The surge in oil prices, which are now over 40% higher since the start of the Iran war, along with the higher-priced summer driving fuel blends, are contributing to the upward pressure on prices and impacting consumers’ wallets.
President Trump recently announced a temporary waiver of the Jones Act, allowing non-US ships to deliver goods to other parts of the US. While this move may have a minimal impact on fuel prices, it does help alleviate the supply chain, providing more options to get fuel to US markets.
Diesel prices have also skyrocketed, rising roughly 38% from a month ago to surpass $5 per gallon, marking a four-year high. This increase in fuel costs for trucks and machinery is particularly concerning, given that approximately 70% of goods are transported via trucking in the US. Federal Reserve Chair Jerome Powell remarked on the potential consequences of higher energy prices seeping into inflation readings during a recent speech.
The surge in gasoline prices coincides with a third consecutive day of rising oil prices, following attacks on a major natural gas processing facility in southwestern Iran by Israel and subsequent retaliation by Tehran targeting energy infrastructure across the region. West Texas Intermediate crude oil has risen above $95 per barrel, while futures on international benchmark Brent crude have topped $103.
Traders are closely monitoring the situation in the Strait of Hormuz, a critical oil transit chokepoint where flows have slowed significantly. Analysts at RBC Capital Markets estimate that if the conflict persists for another three to four weeks, oil prices could surpass $128 per barrel, similar to levels reached after Russia’s invasion of Ukraine. In the event of a prolonged conflict lasting several months, prices could exceed the peak of $146 per barrel seen in 2008, analysts predict.
The current state of affairs in the Middle East continues to impact oil prices, with the potential for further escalation leading to even higher costs for consumers. As the situation unfolds, it remains crucial for individuals to monitor developments and prepare for potential fluctuations in gasoline prices.
