Fuel prices in the US have crossed $4 per gallon for the first time in over three years, amid the nation’s ongoing conflict with Iran that has disrupted oil supply, triggering costs for consumers, CNBC reported on Tuesday.
“We foresee potential for a disruption to the American fuel supply,” Lee Zeldin, head of the Environmental Protection Agency, told reporters at S&P Global’s CERAWeek conference in Houston last week.
What are the fuel prices now?
The national average gasoline price has reached $4.018 per gallon – marking the highest since August 2022, when the Russia-Ukraine war rattled global energy markets – mentioned CNBC’s report – citing travel group AAA.
Since the US and Israel carried out strikes on Iran in late February, petrol prices have jumped by more than 30%, AAA data showed.
Meanwhile, diesel prices crossed $5 per gallon mark on March 17 – with the current rates over 40% higher than they were before the conflict.
Why the surge in prices?
The Strait of Hormuz—a narrow but crucial sea route—has become the centre of the ongoing Israel-US-Iran conflict – which has also pushed Gulf nations to the brink.
Oil prices have zoomed as tanker movements through the Strait of Hormuz have plunged due to attacks by Iran.
The Strait of Hormuz connects the oil-rich Persian Gulf to the rest of the world. About 20% of global oil supplies passed through the waterway before the war, mentioned CNBC’s report.
On Monday, President Donald Trump the US could escalate its response. He said this could include strikes on Iran’s key infrastructure, including power facilities, oil fields, Kharg Island, and possibly desalination plants, targets he claimed had so far been deliberately avoided.
The surge in diesel prices could have ripple effects on the US economy as fuel is essential for trucks and freight trains that transport goods to the markets.
Higher prices in supermarkets?
Consumers may start feeling the impact as early as April through higher prices at the supermarket and for their online orders – CNBC cited Patrick De Haan, head of petroleum analysis at GasBuddy – as saying.
“This is really quickly going to ignite additional inflation,” the analyst had said, as per the outlet.
Trump admin plans to increase diesel supply
Last week, Energy Secretary Chris Wright reportedly said the Trump administration has plans to increase the diesel supply.
“We do have some ideas on diesel, that we can bring extra diesel to the marketplace,” Wright told CNBC’s Brian Sullivan in an interview in Houston. “I think we’ll see that happen before too long.”
