Iran war starts pinching US; gas prices, transport costs surge
The average price of oil in the U.S. rose to $4.09 per gallon on Friday; That’s up more than a dollar from just before the war and the highest since August 2022.
The cost of diesel rose sharply to $5.53 per gallon on Friday, from $3.64 per gallon a year ago, according to data provided by the American Automobile Association (AAA). Diesel is widely used in agriculture, construction and transportation, among other industries.
You can follow our live coverage of the West Asian war here.
E-commerce giant Amazon also said it plans to add a 3.5 percent fuel surcharge to third-party sellers starting April 17.
The U.S. Postal Service said Wednesday it is seeking to impose a temporary 8 percent fuel surcharge on package and express mail deliveries to cope with rising transportation costs.
If approved by the Postal Regulatory Commission, the surcharge would go into effect April 26 and remain in effect until Jan. 17, 2027, a notice posted on the Postal Service’s website said. If the war against Iran lasts longer, it will also cause supply chain disruptions in the United States.
“I don’t think the United States will avoid this. These are global markets,” New York-based analyst Rachel Ziemba, who advises companies on geopolitical risk, was quoted as saying by The Washington Post.
“Experts were worried even a week ago. Now they are even more worried,” he said.
“If shipping costs start going up, that will be reflected in other prices,” CBS quoted Austan Goolsbee, president of the Federal Reserve Bank of Chicago, as saying.
“So in the near term, but not immediately, you’re going to start to see the pressure on the consumer – they’re just going to get sticker shock. People were already quite concerned about affordability and cost of living, and that was going to increase further,” he said.
Also read: At least three people killed, two injured in US-Israeli airstrike on Iran’s Qara Mountain
The closure of the Strait of Hormuz has already cost the global economy hundreds of millions of barrels of oil, and its effects are being felt on an ongoing basis corresponding to travel time from the Persian Gulf, The Washington Post reported, citing a recent client note from commodities experts at JPMorgan.
Asia was the first to feel the loss in Gulf oil shipments, as governments ordered rationing and austerity measures. Europe is expected to experience physical famine by mid-April as the last ships loaded with oil before the war arrive at the continent’s ports.
The last market to suffer from this will be the USA, as it takes 35 to 45 days to reach US ports from the Bosphorus.
Prices will rise, but shortages of refined products starting in late April or May will likely be limited to California, which is physically isolated from the nation’s fuel supply system, according to the JPMorgan report.
