U.S. crude prices briefly climbed above $90 a barrel Friday for the first time since 2023 as the Iran conflict rattled energy markets.Gas prices are also rising, though AAA said the national average was up nearly 34 cents from a week ago as of Friday.The war in Iran has led to attacks on refineries and ships in the Strait of Hormuz, a critical passageway for more than a fifth of the world’s oil.In response, President Donald Trump announced that his administration is financially guaranteeing those ships, with the U.S. Navy ready to provide escorts if necessary. “If we have a little high oil prices for a little while, but as soon as this ends, those prices are going to drop, I believe lower than even before,” Trump said on Tuesday.Economists warn higher oil prices could affect more than just the price at the pump.Amy Myers Jaffe, director of the NYU Energy, Climate Justice & Sustainability Lab, said, “Oil is a very ubiquitous commodity when it comes to our daily lives.”Research from the Federal Reserve found that the surge in energy prices following Russia’s invasion of Ukraine contributed to higher U.S. headline inflation as energy costs moved through transportation and supply chains. The study notes that oil is used both in consumer goods and as an input in production, meaning higher oil prices can raise firms’ costs, which are then passed through to consumers in the form of higher prices. However, the study found the broader impact on core inflation and economic growth was smaller, reflecting the U.S. economy’s reduced dependence on oil compared to past decades.”These oil price shocks noticeably affected headline inflation, adding almost one percentage point to it upon impact, while the effects on core inflation and economic activity were fairly small,” the study said.U.S. Federal Reserve Governor Christopher Waller said on Friday he doesn’t believe the global jump in oil will lead to persistent inflation or warrant a change in monetary policy.”You’re going to see a spike in gasoline prices. That’s what American citizens are going to see when they go to the pump, and they’re going to stare and be a little shocked,” Waller said on Bloomberg Television. “If it’s unwound in … a couple of weeks or even two months, it’s not going to be a big factor down the road.”Jaffe said the U.S. economy is better positioned to absorb oil shocks than it was decades ago, but added that, “we’re not out of the dangerous woods when it comes to how big a ripple might we see from this crisis, depending on how long it lasts.”Zachary Griffiths from CreditSights emphasized the importance of monitoring the Strait of Hormuz for how much of an impact the war could have on the economy, saying, “I think it’s going to just come down to really what oil prices do, and that’s going to largely depend on what happens in the Strait. I think that’s as straightforward as this very complex situation could be.”
U.S. crude prices briefly climbed above $90 a barrel Friday for the first time since 2023 as the Iran conflict rattled energy markets.
Gas prices are also rising, though AAA said the national average was up nearly 34 cents from a week ago as of Friday.
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The war in Iran has led to attacks on refineries and ships in the Strait of Hormuz, a critical passageway for more than a fifth of the world’s oil.
In response, President Donald Trump announced that his administration is financially guaranteeing those ships, with the U.S. Navy ready to provide escorts if necessary.
“If we have a little high oil prices for a little while, but as soon as this ends, those prices are going to drop, I believe lower than even before,” Trump said on Tuesday.
Economists warn higher oil prices could affect more than just the price at the pump.
Amy Myers Jaffe, director of the NYU Energy, Climate Justice & Sustainability Lab, said, “Oil is a very ubiquitous commodity when it comes to our daily lives.”
Research from the Federal Reserve found that the surge in energy prices following Russia’s invasion of Ukraine contributed to higher U.S. headline inflation as energy costs moved through transportation and supply chains. The study notes that oil is used both in consumer goods and as an input in production, meaning higher oil prices can raise firms’ costs, which are then passed through to consumers in the form of higher prices. However, the study found the broader impact on core inflation and economic growth was smaller, reflecting the U.S. economy’s reduced dependence on oil compared to past decades.
“These oil price shocks noticeably affected headline inflation, adding almost one percentage point to it upon impact, while the effects on core inflation and economic activity were fairly small,” the study said.
U.S. Federal Reserve Governor Christopher Waller said on Friday he doesn’t believe the global jump in oil will lead to persistent inflation or warrant a change in monetary policy.
“You’re going to see a spike in gasoline prices. That’s what American citizens are going to see when they go to the pump, and they’re going to stare and be a little shocked,” Waller said on Bloomberg Television. “If it’s unwound in … a couple of weeks or even two months, it’s not going to be a big factor down the road.”
Jaffe said the U.S. economy is better positioned to absorb oil shocks than it was decades ago, but added that, “we’re not out of the dangerous woods when it comes to how big a ripple might we see from this crisis, depending on how long it lasts.”
Zachary Griffiths from CreditSights emphasized the importance of monitoring the Strait of Hormuz for how much of an impact the war could have on the economy, saying, “I think it’s going to just come down to really what oil prices do, and that’s going to largely depend on what happens in the Strait. I think that’s as straightforward as this very complex situation could be.”
