HeadlinesBriefing favicon HeadlinesBriefing.com

Oil Prices Rise Amid Middle East Tensions, Diesel Nears $6 Gallon

New York Times Top Stories •
×

Mounting fears that Middle East clashes could escalate and disrupt energy supplies pushed oil prices above $110 a barrel on Friday, while U.S. diesel surged above $6 a gallon. Concerns over oil supplies, already heightened by the U.S. war against Iran, broadened with reports that the Houthi militia had seized a critical port on the Red Sea, presenting a new threat to shipping in the area. The price of Brent crude oil, the international benchmark, surged before easing to about $106 a barrel, and West Texas Intermediate crude, the U.S. standard, was trading at nearly $101 a barrel.

The average price of a gallon of diesel fuel jumped to $6.06, according to the AAA motor club, a 60 percent rise since the United States and Israel attacked Iran on Feb. 28. In response, Iran has effectively blocked most ships from passing through the Strait of Hormuz, the narrow waterway between the Persian Gulf and the Gulf of Oman. During normal times, about a fifth of the world’s crude oil flows through the strait.

With assistance from the U.S. Navy, a few tankers have been able to get through, but Iran has signaled it was willing to be more aggressive in exerting control over the strait. U.S., European, African and Asian oil refineries have increased production to make up for lost supplies from the Middle East and Russia, where refineries have come under attack by Ukraine. But demand for energy is still outstripping supply. As a result, governments, businesses and farmers are having to pay more for the diesel they need to run trucks, farm machinery and other heavy equipment.

And homeowners who use heating oil, which is similar to diesel, are growing concerned about their monthly bills as winter nears. Fuel accounts for as much as 30 percent of food costs in the United States, said Kate Gordon, a former senior adviser in the Department of Energy and now the chief executive of California Forward, a nonprofit business group. "So far, farmers and trucking companies have been absorbing a lot of this cost increase," she said, "but with the war continuing on with no end in sight, they are going to pass through more and more of the price jump to consumers.".