Today marks a new milestone with a directly proportional blow to the pockets of Americans. The rebound in oil prices has pushed the country’s gasoline to levels not seen since July 2022when the effects of the pandemic plus the war between Ukraine and Russia caused hydrocarbons to skyrocket and, with it, fuels too.
During Thursday’s day, Brent crudeconsidered the international reference, It briefly surpassed $126 per barrel, a level considered a wartime high.. Although its advance subsequently moderated, the volatility reflects the uncertainty that dominates the energy market. Before the start of the conflict at the end of February, this same indicator was around $70 dollarswhich shows the magnitude of the increase.
The main trigger has been the war in the Middle East, particularly the tensions with Iran. The situation has disrupted key oil flows, especially in the Strait of Hormuz, one of the most strategic points for global energy trade. Added to this is the blockade of Iranian ports by the United States, which has significantly reduced the available supply.
“The collapse of talks between the United States and Iran, together with President Trump’s rejection of the proposal to reopen the Strait of Hormuz, is causing the market to lose hope for a rapid resumption of oil flows,” said Warren Patterson and Ewa Manthey, commodities strategists at ING bank.
According to the American Automobile Association (AAA), The average price of gasoline in the country reached $4.30 per gallon, the highest level since July 2022. This represents an increase of $1.32 per gallon compared to the pre-conflict period.
The situation is even more critical in Californiawhere drivers face the highest prices in the country. The state average was $6.01 per gallonwhile the diesel cost approximately $7.50 dollars. This increase has broader implications, as diesel is essential for the transportation of goods, which can translate into higher prices for goods and services.
In parallel, the market continues to react to political and military signals. Recent reports indicate possible additional actions by the US government, which has reduced expectations of a quick resolution to the conflict. This has reinforced the perception of limited supply in the short term.
“The oil market has gone from over-optimism to the reality of the supply disruption we are seeing in the Persian Gulf,” Warren Patterson, head of commodities strategy at ING, told CNBC. “The longer this disruption persists, the less the market will be able to rely on inventories, and the greater the need to destroy demand. The only way to achieve this would be through higher oil prices.”
Despite the increase in prices, consumption in the United States remains relatively strong. The president of the Federal Reserve (Fed), Jerome Powell, acknowledged that households continue to spend, although he warned about the risks.
“People continue to spend. How long can that continue in a world where if gas prices go much higher, that’s taking available money out of pockets?“Powell said during a press conference.
Analysts warn that, if the interruptions continue, The price of oil could rise even further, even towards a range of between $140 and $150 dollars per barrel. However, such high levels could eventually curb global demand, creating a new equilibrium in the market.
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