NEW YORK (AP) — Already feeling pinched since the start of the Iran war, consumers are likely to feel more pain ahead as oil prices pushed past $100 a barrel Thursday amid renewed fighting and military strikes that have left global oil supplies stranded in the Middle East.
The elevated price marked a turn from lower oil prices enjoyed briefly when hostilities between the U.S. and Iran waned in June. Brent crude, the international standard, last reached
$100 a barrel in May.
Companies that produce and sell fresh food, school supplies and anything that gets shipped using fuel reported cost impacts from an earlier spike in energy prices after the U.S. and Israel attacked Iran. They’re likely to continue passing some of their increased expenses to consumers.
“In general, once you have an increase in costs, businesses are fast in increasing the price,” said Miguel Gomez, director of Cornell University’s Food Industry Management Program. But, he noted, "it takes more time to lower prices when the costs go down.”
Here's how higher oil prices could further impact consumers' wallets.
Volatility along the Strait of Hormuz and broader regional instability pushed up the price of crude oil, the main ingredient in gasoline, and could continue to make driving costlier during the second half of summer, according to motor club AAA.
The average U.S. price for regular gasoline reached $4.09 a gallon Thursday, up 15 cents from a week ago, with drivers in most states now paying $4 or more, according to AAA.
“Given the typical lag along the oil industry’s supply chain, prices at the pump are poised to keep rising at least into next week,” said Pavel Molchanov, investment strategy analyst at Raymond James. But he noted that futures prices for oil delivered later this year and next year are lower, suggesting prices could fall once military action ends.
For the most part, higher gasoline prices haven't stopped Americans from driving. Gasoline demand rose 1% to 8.9 million barrels per day last week, according to the U.S. Energy Information Administration.
Pressure on gasoline prices could persist because fewer refineries are available to process crude than before the conflict. Refineries in the Middle East have been damaged, and Ukrainian attacks have damaged refineries in Russia.
Grocery prices generally rise with oil because farmers use diesel fuel to power equipment, while many food products are transported by trucks that require fuel.
“Oil at $100 doesn’t make food prices jump right away, but it does put upward pressure across the food supply chains, especially for categories that depend heavily on trucking, cold storage and packaging,” Gomez said. Fresh produce and dairy could feel a larger impact because they require refrigeration during delivery.
Imported goods are also vulnerable to higher shipping costs, Gomez said. “Things like olive oil that we produce very little here and are coming from mostly from Europe are going to be up.”
Grocery chain Albertsons on Thursday lowered its 2026 fiscal outlook, citing pressure on its core grocery business and a pullback in consumer spending.
Higher fuel costs for ships, trucks and air carriers can trickle down to consumers and businesses that depend on shipping. UPS, FedEx and other shipping services introduced fuel surcharges and other fees as fuel prices increased.
According to an AFS Logistics and TD Cowen Freight Index released July 14, truckload pricing is at a four-year high because of rising fuel costs and capacity constraints.
Andy Dyer, CEO of AFS Logistics, said diesel prices in the second quarter were about 51% higher than in January and February, while jet fuel prices rose 90% from a year earlier.
“Beyond the direct impact of higher freight bills paid by shippers, these price movements also have second-order effects that squeeze rates higher,” he said. “Smaller truckload carriers working on tight margins may park trucks and wait for fuel prices to revert to more palatable levels before returning to operation.”
Rural lifestyle retailer Tractor Supply Co. reduced its annual sales outlook on Thursday, citing in part higher fuel prices during its spring selling season that weighed on customer spending.
”Our customers often drive longer distances to shop frequently in pickup trucks, many of which are diesel-powered, making them especially sensitive to higher fuel costs,” CEO Hal Lawton told analysts.
Lawton said customers are still investing in their pets, animals, farms and properties, but shopping has become “more deliberate.” Customers are consolidating trips, prioritizing needs-based purchases and taking a more measured approach to discretionary spending.
The Footwear Distributors and Retailers of America trade group warned in a report Wednesday that increasing freight and material costs, along with rising tariffs costs, are creating big challenges for the footwear industry as companies prepare for the back-to-school shopping season and the remainder of the year.
Matt Priest, CEO and president of the trade group, said some of its members have cited 25% price increases for petroleum-based materials used in footwear manufacturing due to the Middle East conflict. Those costs could eventually translate into roughly a 5% increase in the cost of finished footwear products sold to consumers, Priest said in the report.
Footwear companies have been front-loading inventory and accelerating imports before President Donald Trump imposes new tariffs on foreign products, putting additional pressure on shipping rates, he said.
“Container rates are spiking right now,” Priest said.
Since the war began, airlines have responded to the jump in fuel costs by raising fares and add-on fees, and trimming flights or routes that are no longer profitable at higher fuel prices. Those moves can help protect the airlines’ margins, but also leave travelers facing higher prices and fewer options, particularly in smaller or less competitive markets.
In the latest sign that the conflict is driving up costs for the travel industry, American Airlines on Thursday reported a sharp decline in second-quarter net income despite record revenue and strong spring travel demand.
American said higher fares helped offset nearly half of its higher fuel bill but not enough to prevent it from lowering its full-year outlook.
Despite higher prices, jet fuel demand in the last four weeks increased 9% compared to the same time last year, according to EIA.
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Associated Press writers Rio Yamat in Las Vegas, Wyatte Grantham-Philips and Dee-Ann Durbin in Detroit contributed to this report.
