Escalating conflicts in the Middle East have driven a significant surge in international crude oil futures, pushing gasoline prices close to the $4 per gallon mark on Friday. According to data from the American Automobile Association (AAA), the national average price for gasoline has risen to over $3.91 per gallon, marking the highest level since 2022. Over the past few weeks, oil prices have continued to climb steadily, increasing by $0.98 per gallon compared to one month ago.
Given the current trend, prices are expected to reach $4 per gallon in the coming days. Patrick De Haan, head of petroleum analysis at the fuel price analysis platform GasBuddy, stated, "At this point, I believe it is highly likely to happen."
Current oil prices have surged more than 40% since the outbreak of the Iran conflict. Additionally, the use of higher-grade fuel blends required during the summer driving season has further driven up prices, increasing financial pressure on consumers.
On Wednesday, the President announced a temporary waiver of the Jones Act, which previously prohibited non-U.S. vessels from transporting goods between domestic ports. De Haan commented, "This measure will have a minimal impact on fuel prices but will help ease supply chain pressures and provide more fuel supply channels for the U.S. market."
Diesel prices have also experienced a sharp increase, rising approximately 38% compared to a month ago and surpassing $5 per gallon, reaching a four-year high. The rise in fuel prices for trucks and machinery is particularly concerning, as about 70% of goods in the United States are transported via road freight.
Federal Reserve Chair Jerome Powell remarked on Wednesday, "Oil and its derivatives are embedded in the production and transportation of countless goods." He noted that rising energy prices could translate into inflation figures.
The significant spike in gasoline prices comes as international oil prices climbed for the third consecutive trading session on Thursday. This followed an Israeli attack that damaged a large natural gas processing facility in southwestern Iran, prompting retaliatory strikes by Iran on multiple energy infrastructure sites in the region.
Dennis Kissler, senior vice president at financial services firm BOK Financial, stated that the latest escalation "has pushed crude trading into a phase of rapid volatility." The U.S. benchmark crude, West Texas Intermediate (WTI), rose above $95 per barrel, while the international benchmark Brent crude futures surpassed $103 per barrel.
Traders continue to closely monitor the Strait of Hormuz, a critical chokepoint for oil transportation, where shipping has nearly come to a standstill. Strategists warn that if the conflict persists, oil prices could climb further.
RBC Capital Markets predicts that if the conflict continues for another three to four weeks, oil prices could exceed the post-Russia-Ukraine conflict high of $128 per barrel. If the war extends for several months, prices might even surpass the 2008 historical peak of $146 per barrel.