JPMorgan says US gas prices could soon jump above $5 a gallon if the Iran war drags on
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- US gas prices could hit $5 a gallon by the middle of this month if the Iran war continues, JPMorgan says.
- The average US gas price jumped above $4 per gallon for the first time since 2022 this month.
- Outside the US, Asia and Australia face outright fuel shortages, JPMorgan and Goldman Sachs say.
US gas prices could top $5 a gallon this month if the war in Iran keeps the Strait of Hormuz shuttered in the coming weeks, JPMorgan said.
The bank wrote that the US is at lower risk of shortages compared to other global economies, but it warned that Americans will feel the impact of the war and oil market disruptions through higher gas prices as US and Brent oil both hover around $110 a barrel.
"Asia is the first region to feel physical shortages, while the US is more likely to avoid supply disruptions but still face higher gas prices at the pump," JPMorgan analysts said.
The national average gas price surpassed $4 a gallon for the first time in four years this month, according to data from AAA .
This marked the first time that gas broke above $4 per gallon since August 2022 amid the economic disruptions from the COVID-19 pandemic. Gas prices were elevated from March to August, peaking in June at $5 per gallon.
Gas prices are highest in California, with prices nearing $6 per gallon, per GasBuddy data.
JPMorgan's commodity team warned that gas prices risk exceeding $5 a gallon if the Strait of Hormuz is still effectively closed by mid-April.
The Strait of Hormuz has emerged as the crucial chokepoint for global trade in oil and other commodities, including fertilizer and helium.
Unlike in the US, where high gas prices have been the focal point for consumers, some nations have experienced outright fuel shortages due to the war.
South and southeast Asian countries like Bangladesh, Sri Lanka, Pakistan, Indonesia, and the Philippines have reported shortages, refinery shutdowns, and flight reductions, among other impacts, JPMorgan said.
They said Africa will be the next region to be affected, followed by Europe. The impacts will vary depending on local stock levels and dependency on imports of fuel, ranging from outright shortages to large price increases.
Goldman Sachs analysts said there have already been reported shortages beyond Asia in Kenya, Slovenia, and Australia.
The US is "last in line" for shortages, JPMorgan added, noting that direct physical scarcity of fuel is unlikely in the near term.
The JPMorgan economics team said higher gas prices could erode the benefits of Trump's tax cuts. Others have made similar predictions, with higher pump prices potentially leading to an extra $150 billion in gas spending this year.
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