Key Takeaways
Fuel costs are rapidly climbing as conflicts in the Middle East drive up crude oil prices. The national average price for gasoline hit $3.91 per gallon on Friday, the highest mark since 2022, according to AAA.
GasBuddy's head of petroleum analysis, Patrick De Haan, stated that $4 per gallon gasoline is becoming increasingly likely in the coming days.
Fuel costs have risen more than 30% since the start of the Iran conflict. This marks the largest increase over a 20-day period since January 2000, according to an analysis of Oil Price Information Service records by Dow Jones Market Data.
Drivers were paying an average of $3.88 per gallon as of Thursday's report. That's up $0.98 from 30 days ago.
West Texas Intermediate crude prices have surpassed $95 per barrel, and the international Brent crude benchmark has topped $103 per barrel.
Diesel Prices Surge Threatens Trucking Industry
Diesel prices have jumped approximately 38% in a month, surpassing $5 per gallon and reaching a four-year high. This development carries significant implications, as roughly 70% of goods in the U.S. are transported by truck.
Federal Reserve Chair Jerome Powell noted Wednesday that high energy costs pose a risk to overall inflation. "Oil and its derivatives enter into the production and transportation of many goods in many ways," he said.
Factors Driving Up Crude Oil Prices
The recent price surge is attributed to military actions by the Israeli military against a key natural gas processing facility in southwestern Iran. Tehran subsequently retaliated against energy infrastructure in the region.
Dennis Kissler, senior vice president at BOK Financial, explained that the escalating tensions have placed the crude oil market in a "fast market" trading environment.
Market participants are closely watching the Strait of Hormuz, a critical oil transit route, where traffic has significantly decreased.
RBC Capital Markets forecasts that oil prices could exceed $128 per barrel if the conflict lasts three to four weeks—a level reached after Russia's invasion of Ukraine. If hostilities continue for months, market analysts predict oil prices could surpass the 2008 peak of $146.