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Gas prices are linked with a guaranteed rate of return on assets. Therefore, the initiation of new schemes provides more incentives to the public gas utilities on account of increase in prices. photo: file
WASHINGTON:
US-Israeli strikes in Iran, and Tehran’s retaliation, are set to trigger a surge in US gas prices with a potential knock-on inflationary hit that could pile pressure on President Donald Trump domestically as midterm elections approach.
Economists warn that costs at the gas pump — a politically sensitive issue — could jump in just days, while inflation risks would make the Federal Reserve more cautious of cutting interest rates.
The conflict started with strikes over the weekend that killed the Iranian supreme leader, and oil prices have soared as the war disrupted supplies.
The crucial Strait of Hormuz, through which 20 percent of global oil transits, has been effectively closed and energy infrastructure across the Middle East hit.
“Prices at the pump are likely to rise within days,” Oxford Economics lead analyst John Canavan told AFP.
Gas prices have been “slowly but steadily increasing since early January,” he said, adding that “retailers are typically quick to respond to any developments pushing prices higher.”
Already, the price of Brent crude has momentarily jumped to its highest level since July 2024.
Additional costs will stretch US households, threatening consumer spending which makes up two-thirds of US GDP, analysts say.
