U.S. fuel prices topped $4 a gallon for the first time in more than three years, amid an ongoing conflict with Iran that has disrupted oil supplies and caused costs for consumers, CNBC reported Tuesday.
“We foresee the potential for a disruption in the US 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 fuel prices now?
The national average gasoline price hit $4.018 a gallon — the highest since August 2022, when the Russia-Ukraine war rocked global energy markets — CNBC reported — citing travel group AAA.
Gasoline prices have jumped more than 30% since the US and Israel launched strikes on Iran in late February, AAA data showed.
Meanwhile, diesel prices topped $5 a gallon on March 17 – with current rates more than 40% higher than they were before the conflict.
Why the sharp increase in prices?
The Strait of Hormuz – a narrow but key sea route – has become the focus of the ongoing Israel-US-Iran conflict – which has also pushed Gulf countries to the brink.
Oil prices rose as tanker movements through the Strait of Hormuz 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 the world’s oil reserves went by water before the war, a CNBC report said.
President Donald Trump warned Iran on Monday that the United States may escalate its response if a deal is not reached soon and the Strait of Hormuz is not reopened. He said that could include strikes on Iran’s key infrastructure, including energy facilities, oil fields, Kharg Island and possibly desalination plants, targets he said he had so far deliberately avoided.
A spike in diesel prices could have a knock-on effect on the US economy, as the fuel is essential for the trucks and freight trains that transport goods to markets.
Higher prices in supermarkets?
Consumers may start feeling the impact as early as April through higher prices in supermarkets and for their online orders, Patrick De Haan, head of oil analysis at GasBuddy, told CNBC.
“This is going to fuel more inflation really quickly,” the analyst said, according to the statement.
Trump admin plans to increase diesel supply
Last week, Energy Secretary Chris Wright reportedly said the Trump administration plans to increase diesel supplies.
“We have some ideas on diesel that we can bring some extra diesel into the market,” Wright told CNBC’s Brian Sullivan in an interview in Houston. “I think we’ll see before long.
