Middle East War Drives US Fuel Prices Up, Stoking Stagflation — NRG-IA

Data shared by economist Mohamed El-Erian, based on an analysis published by the Financial Times, shows a sharp divergence between the actual trajectory of US fuel prices and the levels estimated in a scenario without conflict in the Middle East. The charts indicate an accelerated rise for both gasoline and diesel, while the "no war counterfactual" scenario remains significantly lower. This difference essentially represents the indirect economic cost of regional tensions transferred to the US economy. Oil no longer reflects just supply and demand, but also geopolitical risk The oil market operates on the anticipation of risk, not just actual physical disruptions to production. Even in the absence of a total blockade of the Strait of Hormuz, the mere possibility of a military escalation: increases maritime insurance costs; strains futures markets; drives traders and nations to build up stockpiles; introduces a persistent "risk premium" into oil prices. Reuters reports that US energy exports have risen sharply to offset the global deficit generated by tensions in the Gulf, but this export growth has simultaneously contributed to pressure on the domestic US market. Between February and April 2026, the average price of gasoline in the US rose from approximately $2.91/gallon to over $4/gallon, while diesel surpassed $5.5/gallon in some regions. Diesel is becoming one of the most sensitive components of the energy shock The economic impact does not stop at the individual consumer. Diesel directly affects: logistics; agriculture; freight transport; food distribution; industrial costs. This explains why inflation can continue to remain high, even under the conditions of a still-solid US economy. A report by the Federal Reserve Bank of New York shows that low-income households are disproportionately affected by rising fuel prices, being forced to reduce travel or seek alternative transportation to offset rising energy costs. The US economy enters a zone of stagflationary pressure Mohamed El-Erian warns that the war and high energy prices are beginning to reactivate stagflationary forces—the combination of high inflation and economic slowdown. This combination is one of the most difficult situations for central banks: high inflation prevents interest rate cuts; high energy costs impact consumption and investment; government bond yields rise; financing costs for governments and corporations increase. In parallel, the US administration is attempting to stabilize the market by utilizing the Strategic Petroleum Reserve and through temporary measures to ease pressure on fuel prices. The energy conflict is also beginning to hit global industry The effects already extend beyond the oil sector. Toyota has estimated losses of approximately £3 billion associated with rising raw material costs and disruptions generated by the conflict in the Middle East. The Financial Times and other economists warn that regional tensions risk affecting: global capital flows; technology investments; the AI industry; international supply chains; government bond markets. Thus, the conflict is beginning to transform from a regional crisis into a global multiplier of energy and financial costs. Why it matters