Oil prices continued to surge on Thursday, hitting a fresh wartime high above $126 a barrel on concerns that the war in Iran could escalate, leading to a longer disruption of fuel supplies from the Middle East.
President Trump maintained his stance that the naval blockade of Iran’s ports would persist until Tehran gives up its nuclear program. His remarks to Axios on Wednesday suggested that the standoff over the Strait of Hormuz, the vital trading route for oil and natural gas supplies, was not nearing a resolution.
After the Federal Reserve held interest rates steady on Wednesday, Jerome H. Powell acknowledged that the war had led to significant uncertainty and policymakers needed to be “very cautious” about their next steps.
“We’re very well aware that people are experiencing higher gas prices all over the country now,” Mr. Powell said. “And that hurts.” He added that if energy costs remained high, the effects could filter through to airfares and other products and services dependent on oil. “People are going to start to feel that,” he said.
The average price of regular gasoline in the United States has followed oil higher, hitting $4.30 a gallon on Thursday, up 27 cents in a week, according to data from the AAA motor club.
Higher energy prices and the lingering effects of Mr. Trump’s tariffs are expected to keep inflation elevated through the rest of the year, Bernard Yaros, the lead U.S. economist at Oxford Economics, wrote in a note. “Inflation will get worse before it improves,” he added.
The World Bank estimated that the war in Iran would push energy prices up 24 percent this year, according to a broad index covering oil, gas and coal. “The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices and finally, higher inflation, which will push up interest rates and make debt even more expensive,” Indermit Gill, the World Bank’s chief economist, said this week.
Over the past two weeks, the price of Brent crude, the global benchmark for oil, has risen about 30 percent. The price of Brent for June delivery, a soon-to-expire contract that investors trade based on their expectations for where prices are headed in the near future, jumped on Thursday to $126 a barrel, before pulling back to around $122 a barrel, a gain of nearly 3 percent on the day.
West Texas Intermediate crude, the U.S. benchmark, was around $109 a barrel, up about 2 percent.
Gasoline prices hit a fresh wartime high.
U.S. gasoline jumped to the highest point since the start of the war in Iran, according to AAA, an increase that has raised the cost for drivers 44 percent since the first U.S.-Israeli strikes.
Diesel prices stood at $5.50 on Thursday, up 46 percent since the start of the war.
Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
