Amid Middle East tensions and the intricacy of the energy market, data issued Tuesday shows a downturn in gasoline prices, with the Consumer Price Index (CPI) for gasoline falling 3.3 percent in January and a 6.4 percent decrease over the past 12 months.
While the decline is a boon for winter-priced gasoline, it comes at a time when the world eyes the volatile situation in the Middle East, where experts say the conflicts involving the Palestinian militant group Hamas in Gaza and the Houthi rebels in Yemen threaten to disrupt the balance of oil supply and demand, and thus, gas prices.
What's Going On?
Oil prices have risen nearly 7 percent since the U.S. began striking Houthi military sites on January 11, and nearly half of the members of the National Association for Business Economics (NABE) predicted earlier this month that further escalation of the conflicts could propel Brent Crude oil prices above $90 per barrel (oil is currently priced at $77.79), potentially shaving off 0.3 to 0.4 percentage points from U.S. GDP.
For gas, that means a potential increase in prices at the pump, even more than the expected price hike due to seasonality.
"We've seen the national average price of gasoline inching higher now for three straight weeks, but I'm afraid the worst is yet to come," Patrick De Haan, head of petroleum analysis at GasBuddy, shared with Newsweek via email.
While De Haan's comment focuses on "major refinery issues" in several regions, he said that "the eventual transition to summer gasoline is likely to continue to put upward pressure on prices, with larger weekly increases likely coming in March and April."
He said that global inventories have been declining in recent weeks, which is also putting upward pressure on prices as major producers in the Middle East, notably Saudi Arabia, look to cut capacity.
The ongoing tensions in the Middle East, particularly between Israel and Hamas, along with the U.S. and U.K.'s military actions against the Houthis aimed at safeguarding maritime navigation and ensuring global oil supply chains remain uninterrupted, reflect a broader strategy to mitigate the risk of significant disruptions in oil supply.
Still, in the immediate term, while oil prices have shown slight upticks, the potential for the conflicts to impact the greater global energy markets remains a concern for some 48 percent of the 184 members of the NABE.
The escalation of military operations in response to Houthi attacks on shipping lanes has led to a concerted effort to protect vital routes for global trade. The United States' destruction of Houthi drones and missiles, reported previously by Newsweek, points to the immediate measures taken to prevent attacks on commercial and naval vessels, ensuring the safety of global oil trade routes.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
To read how Newsweek uses AI as a newsroom tool, Click here.
