US gas prices surge to their highest since October 2023
By Auzinea Bacon, David Goldman, Hanna Ziady, CNN
New York/London (CNN) — Oil and gas prices remained high Monday following attacks on Middle East oil facilities over the weekend – and after the White House suggested the war with Iran could last several more weeks.
Gas prices in the United States rose 2 cents to just under $3.72 a gallon on average, according to AAA. That’s the highest price for regular gas since October 7, 2023.
Since the start of the war with Iran, gas prices have surged 74 cents a gallon. The 26.9% gain in US gas prices over the past month is the largest monthly increase since Hurricane Katrina.
The spike threatens one of President Donald Trump’s biggest talking points: that gas prices have dropped during his second term, including falling below $3 a gallon in December – the lowest since May 2021.
Diesel has gained even more since the war began, rising by $1.24. It now averages $4.99 a gallon, coming close to hitting $5 for the first time since December 2022. Some trucking companies are already adding hefty fuel surcharges, and those costs could get passed on to consumers.
On Monday, Brent crude, the global benchmark, rose slightly, to $103.50 a barrel. WTI, the US benchmark, was down 1% on the day to around $98 a barrel.
Both Brent and US oil soared last week to their highest levels since 2022 – after US-Israeli attacks on Iran prompted Tehran to effectively shut the Strait of Hormuz to most oil tankers, causing the biggest disruption in oil supply in history. About 20% of the world’s oil supply flows through the waterway.
There are few signs that the war, now in its third week, will be over soon. US strikes on Iran’s Kharg island Friday have raised fears over oil supply because most of Iran’s oil is shipped from there, ING commodities strategists wrote in a note Monday.
While the strikes appear to have targeted military rather than energy infrastructure, they still pose supply risks, “particularly given that Iranian oil is about the only oil moving through the Strait of Hormuz,” they added.
Shortly after the Kharg island attacks, debris from an intercepted Iranian drone also fell on a key oil terminal in the United Arab Emirates, forcing a suspension of operations and underlining the threat to Middle Eastern oil facilities from the conflict.
And although the United States appears to have spared Iran’s oil infrastructure for now, Trump warned in a post on Truth Social late Friday that he would reconsider that if Iran continued to interfere with ships’ passage through the Strait of Hormuz.
Head of macroeconomic research at Deutsche Bank Jim Reid summed up in a note Monday: “Markets are still concerned about further escalation, and with each passing day investors have moved to price in a more protracted conflict.”
On Sunday, Trump urged China and US allies to send warships to help resolve disruptions in the Strait of Hormuz, warning that NATO faces a “very bad” future if countries fail to assist. No nations have yet committed to sending warships.
Meanwhile, Iran has ramped up pressure, including laying mines in the strait and saying it will strike any US-linked oil and natural gas infrastructure. More than a dozen vessels have been struck in the Strait of Hormuz since the start of the war on February 28.
In an interview with CBS News Sunday, Iran’s foreign minister Abbas Araghchi said Tehran is open to holding talks with countries wanting to safely access the strait.
Also on Sunday, the International Energy Agency said that emergency oil reserves would soon start flowing to global markets, after member countries agreed last week to release 400 million barrels of oil. Stocks from Asia and Oceania will be made available immediately, while those from the Americas and Europe won’t be released until the end of March, the agency said.
Over the weekend, the Trump administration also made several efforts to expand US oil production to counteract rising fuel prices. On Saturday, it approved a new BP project off America’s Gulf coast – the company’s first new project since the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. And Energy Secretary Chris Wright directed Sable Offshore Corp. to restart its offshore oil rigs and pipelines off the coast of Southern California.
The effective closure of the Strait of Hormuz affects more than oil. Farmers across the world rely on fertilizer shipped through the waterway, potentially affecting grocery prices. And shipped perishables – like dairy, fruit, vegetables and fish – could be the first batch of goods to become more costly.
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CNN’s Chris Isidore contributed to this report.
