Gas prices are set to rise amid U.S.-Israeli war with Iran. Here’s what you could pay at the pump.
(CBS NEWS) – According to CBS News, American motorists could soon pay more at the pump amid spiking oil prices due to the U.S.-Israel attacks on Iran, with experts predicting gasoline prices could rise sharply this week.
The price of West Texas Intermediate crude, a type of oil primarily produced in the U.S., jumped 6.2% on Monday to $71.19 per barrel, according to data from FactSet. Brent crude, the international benchmark, surged nearly 9% to $79.31 per barrel on Monday, its highest point in more than a year.
Gas prices in the U.S. could start moving higher as soon as Monday, according to GasBuddy petroleum analyst Patrick De Haan, who predicted that some gas stations could be charging as much as 30 cents more per gallon by the end of the week.
Brace for “gradual increases”
The projected increase would come after fuel costs had already edged higher this year on concerns about flaring tensions between the U.S. and Iran. On Monday, gas prices averaged about $3 per gallon across the U.S., about 20 cents higher than at the start of January, according to data from AAA.
“Most drivers should prepare for gradual increases this week,” De Haan said in a report. “Low-priced stations will likely move first and more visibly.”
Gas prices were already seeing price increases on Monday in states including Illinois, Indiana, Michigan, Ohio and Texas, he noted in a post on social media.
Higher gas prices would crimp household budgets at a time when many consumers are already feeling pinched by an affordability crunch, with Americans expressing concerns about the rising cost of food, health care and housing.
Gas prices have proved to be one of the bright spots for consumers. Although fuel costs have inched higher this year, prices at the pump are still more than 7% lower than a year ago, according to the latest inflation data.
Relief from Venezuela?
One wild card is the potential impact of fresh oil imports from Venezuela, with Energy Secretary Chris Wright telling CBS News’ Ed O’Keefe on Friday that tankers filled with Venezuelan oil are now arriving in the U.S.
Following U.S. forces’ January capture of former Venezuelan president Nicolás Maduro, President Trump said the U.S. planned to export 30 million to 50 million barrels of Venezuelan oil in partnership with U.S. energy companies.
“Oil is just starting to come now because these refiners buy their oil a month or so ahead, so as it gets into March, you’ll see a lot of Venezuelan crude arriving from what’s called the March runs,” Wright said.
He added, “Absolutely, it helps push gas prices down. More Venezuelan crude coming into the United States and flowing out of Venezuela helps keep gasoline and diesel prices down.”
Broader inflation impact
Economists said higher oil prices could reignite inflation as it has been cooling in the U.S., with the Consumer Price Index in January falling to its lowest level in nine months. Because oil prices underpin everything from transportation to manufacturing costs, surging crude prices could reach beyond the gas pump, experts noted.
“Even if core measures exclude food and fuel, sustained oil increases tend to bleed into transportation, logistics, manufacturing input costs and, ultimately, consumer prices,” noted Nigel Green, CEO of investment advisory firm De Vere Group, in an email.
He added, “Oil does not operate in isolation. Higher freight costs, higher airline fuel bills, higher distribution expenses. Corporate margins tighten or prices rise. Often both.”
An uptick in the U.S. inflation rate could lead the Federal Reserve to hold off in acting to lower interest rates, Adam Hetts, global head of multi-asset at Janus Henderson, said in an email.
While the Fed is expected to keep its benchmark rate steady at its next meeting, set for March 18, economists are predicting the central bank could usher in a fresh cut by mid-year, at its June meeting, according to FactSet.
