NEW YORK (Reuters) — Average U.S. retail gasoline prices crossed $3 a gallon for the first time since November on Monday as the conflict in the Middle East worsened, setting up a key test of public approval of President Donald Trump’s decision to attack Iran, analysts said.
Tehran’s retaliation in response to U.S. and Israeli strikes has disrupted global oil supply, as it hit production facilities in neighboring countries and ships in the Strait of Hormuz, a key global trade route. Oil prices have surged, with Brent crude rising more than 5% to nearly $77 per barrel, and fuel prices moving up in tandem with the feedstock costs.
Higher prices at the pump mark a major risk for Trump and his fellow Republicans as they head into midterm elections in November, with many Americans struggling to keep up with rising costs for daily goods. Nearly half the respondents in a Reuters/Ipsos poll said they would be less likely to support Trump’s Iran campaign if oil and gas prices rise in the U.S.
“Gasoline prices are psychologically powerful,” said Mark Malek, chief investment officer at Siebert Financial. “They are the inflation number that consumers see every single day.”
Analysts expect every rise of $10 a barrel in crude oil prices to result in an increase of 25 cents per gallon at the pump. Refinery snags could lead to bigger jumps in fuel prices, Malek said.
Average retail gasoline prices crossed $3 a gallon on Monday, according to an OPIS live database. They should rise to as high as $3.25 per gallon this week due to the current crisis, said Tom Kloza, senior adviser to fuel supplier Gulf Oil.
U.S. gasoline prices had risen for four straight weeks before the attacks on Iran, GasBuddy data showed, as refiners began the transition to summer-grade motor fuel, which is mandated by environmental regulations and costlier to make.
The increases will be exacerbated by the conflict, GasBuddy analyst Patrick De Haan said.
“In the week ahead, gasoline prices are likely to face heightened upward pressure as seasonal trends continue and markets navigate this evolving geopolitical landscape,” De Haan said.
Story by Shariq Khan, Reuters
