USA
Picnews
US petrol prices have hit $4 per gallon, a level not seen in over three years, due to the escalating conflict between the US and Iran. The war has disrupted global energy supplies, with Iran’s closure of the Strait of Hormuz, a critical trade chokepoint, driving up oil prices. The US national average retail gasoline price has climbed 36% since the US and Israel attacked Iran at the end of February, reaching $4 per gallon on Monday.
The conflict has sent shockwaves through global markets, with oil prices surging 24% this week to over $90 a barrel. The disruption in energy shipments is reverberating through supply chains and economies in import-reliant Asia, which sources 60% of its crude oil from the Middle East.
Analysts warn that the situation could create a combination of higher prices and slower growth. The national average gasoline price reached $3.41 per gallon on Saturday, according to the American Automobile Association (AAA), rising by $0.43 over the past week.
The Trump administration has taken steps to mitigate the impact, including a 60-day waiver of the Jones Act shipping law, allowing foreign-flagged vessels to move fuel between US ports. However, industry insiders expect this to have only a marginal impact on price increases.
The conflict has also led to a surge in inflation expectations, with year-ahead inflation expectations rising to 3.8% in March from 3.4%. The current reading is ahead of 2024 and well above pre-pandemic levels, which were consistently below 2.8%.
The US economy is well-positioned to withstand oil shock, says BNP Paribas. The firm expects the US economy to absorb the shock, as it is now the world’s largest producer of crude and a net energy exporter.
Global oil prices are expected to remain high, potentially climbing to $200 a barrel if Iranian export facilities are damaged. Elevated energy prices are rippling across the global economy, with oil and gas-importing countries in Asia and Europe taking the biggest hit.
The situation is also affecting consumer confidence, with the University of Michigan Survey of Consumers showing a decline in sentiment due to the Iran war and gas prices.
