Washington, United States. Fuel prices in the United States have surged after the US-led war on Iran triggered turmoil in global oil markets, creating a political threat for President Donald Trump ahead of midterm elections.
Oil and petrol prices climb amid market turmoil
Global oil markets have been unsettled since the first strikes against Iran. Brent crude rose from $70 to more than $100 a barrel, while average US petrol prices increased by 11% last week to $3.46 a gallon.
Consumers adjust as prices rise in the Northeast
In Massachusetts, MIT energy economics professor Christopher Knittel said he changed his travel plans after seeing petrol prices reach $3.99 a gallon. Knittel said he did not fill his tank completely and planned to look for cheaper fuel in New Hampshire.
When Knittel reached his family cabin in New Hampshire, he said local competition had pushed prices down to $2.84, compared with $2.24 the previous week.
Analysts cite Strait of Hormuz disruption
Analysts attributed the spike to Iran’s control over the Strait of Hormuz, a chokepoint for 20% of the world’s oil and gas. Patrick De Haan, an analyst at GasBuddy, said about 20 million barrels of oil a day are not reaching their destination.
De Haan said that if the conflict lasts until the end of March, the price surge could rank among the ten largest in history.
Political implications as economic concerns grow
The timing has added pressure for the White House as government data shows rising unemployment and growing public pessimism about the economy. Republican strategist Mark Bednar said the government views it as “politically essential” to keep prices low, noting Trump previously campaigned on a promise of cheap energy.
During his State of the Union address, Trump said petrol in Iowa cost $1.85 a gallon, but by the time of the strikes against Iran the price had already increased to $3.18.
Outlook remains uncertain, experts say
Michelle Brouhard of analysis firm Kpler said a swift resolution is unlikely, citing the appointment of Mojtaba Khamenei as Iran’s new Supreme Leader as a sign the regime will not back down. Analysts estimated a 33% chance the Iranian government collapses by June.
Knittel warned of a “rockets and feathers” effect, in which petrol prices rise quickly during a conflict but take longer to fall after oil prices drop. He said if oil reaches $150 a barrel, petrol could rise to $5 a gallon, which he said would heavily influence how Americans vote.
How are higher petrol prices affecting your travel or spending plans?