Gas prices are surging across the US as the war with Iran continues to rattle global energy markets — with crude oil spiking 3% and American diesel topping $5 a gallon Tuesday, inflicting pain at the pump.
Brent crude rose to $103.42 a barrel as US allies rebuffed President Trump’s demands to help surmount Iran’s blockade of the vital Strait of Hormuz — which saw the transport of 20% of the world’s oil supply before the war, when Brent crude traded in the low $70s.
US benchmark West Texas Intermediate climbed 2.9% to settle at $96.21 per barrel, from around $65 before the conflict began.
Flames and thick smoke billow from a suspected oil facility strike in Tehran earlier this month. Middle East Images/AFP via Getty ImagesRegular gas in the States now costs about $3.80 per gallon — 80 cents higher than a month ago, according to AAA.
While oil markets have been rocked, major stock indexes have avoided a major selloff.
The Dow Jones Industrial Average has slipped less than 3% since the Feb. 28 start of the war, while the S&P 500 is down by the same percent and the Nasdaq is little changed.
Stocks posted modest gains Tuesday morning, with the Dow climbing more than 100 points, or 0.3%. The S&P 500 and Nasdaq both climbed 0.4%.
Energy stocks were climbing on higher oil prices, while airlines, cruise lines and travel companies took steep losses as fuel costs jumped and demand fears grew.
The tumult has stemmed from a global energy squeeze. Attacks and uncertainty around the Strait of Hormuz have slashed tanker traffic and left markets scrambling for alternatives, with no clear solution yet in place.
A map highlights the Strait of Hormuz, a critical chokepoint for global oil flows now under threat. Getty Images
Gas prices are posted at a Chevron station in Palo Alto, Calif., as consumers face rising costs at the pump. Bloomberg via Getty ImagesEven though the US is a major oil producer, domestic gasoline prices track global crude — meaning turmoil overseas is hitting American drivers almost immediately.
Seasonal factors have been adding to the pressure.
The switch to summer-grade gasoline and rising spring demand are amplifying the war-driven spike, pushing prices higher.
Fuel prices climb on display at a US gas station as the Iran conflict drives costs higher. AFP via Getty ImagesThe pain at the pump has been widespread, with prices ranging from the low $3s in some states to well above $4.50 on the West Coast.
Analysts warned the increases may stick. As long as Gulf exports remain constrained and infrastructure stays at risk, oil and gasoline prices appear likely to remain elevated.
Some forecasts suggest national gas prices could approach $4 a gallon if disruptions persist or worsen.
