SouthernWorldwide.com – Oil prices surged to a wartime peak on Thursday, with Brent crude, the international benchmark, surpassing $126 a barrel. This increase is driven by growing concerns that the ongoing Iran war will prolong, subsequently tightening global energy supplies.
The average price for gasoline in the U.S. also reached a new high since the Middle East conflict commenced on February 28. According to AAA, the cost has jumped to $4.30 per gallon, marking the highest prices observed at the pump since July 2022.
American drivers are now spending an additional $1.32 per gallon compared to the prices before the Iran war began. Drivers in California are experiencing the nation’s highest gas prices, with the average reaching $6.01 per gallon on Thursday, as reported by AAA.
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With no immediate end to the conflict in sight, energy markets are expressing significant concern regarding the potential impact on oil supplies. Reports on Thursday suggesting a possible escalation by President Trump have diminished hopes for a swift resolution to the conflict. Meanwhile, the Strait of Hormuz remains effectively closed, and the U.S. has maintained its blockade of Iranian ports.
“The breakdown of talks between the U.S. and Iran, along with President Trump reportedly rejecting Iran’s proposal for a reopening of the Strait of Hormuz, has the market losing hope for any quick resumption in oil flows,” stated strategists Warren Patterson and Ewa Manthey of ING Bank in a research note.
Despite the potential for high U.S. gas prices to curb consumer spending, Americans are currently continuing to spend, as noted by Federal Reserve Chair Jerome Powell on Wednesday. During a discussion about the central bank’s latest interest rate decision, Powell mentioned that the Fed decided to maintain its benchmark rate at its current level. This decision was influenced by “elevated” inflation, which has been linked to the “recent increase in global energy prices.”
“People are still spending. How long can that go on in a world where if gas prices were to go up a bunch more, that’s taking spendable money out of people’s pockets?” Powell questioned during a press conference.
Brent crude, for delivery in June, briefly surged above $126 per barrel before experiencing a pullback to around $114. Benchmark U.S. crude saw a decline of 1.8%, settling at $104.97. Prior to the commencement of the war in late February, Brent crude was trading at approximately $70 per barrel.
Edited by Alain Sherter.
The Associated Press contributed to this report.
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