Higher energy prices raise stagflation fears in Oil & Companies News 31/03/2026 Gasoline prices were one of the clear success stories for US consumers from the first year of President Donald Trump’s second term. The retail price of regular conventional gasoline averaged about US$3.01 a gallon on the president’s inauguration day in January 2025, and a year later was down 10% to about US$2.70 a gallon. The conflict in the Middle East has sent gasoline prices back up again. Regular gasoline averaged about US$3.98 a gallon on Thursday, according to the Automobile Association of America. That is still significantly lower than its all-time high of around US$5 a gallon, hit during the Biden administration in June 2022. But it is about 33% above its level of just a month ago. Diesel, meanwhile, averaged about US$5.38 a gallon at the start of the week, according to the US Energy Information Administration. That is only about 7% below its all-time high, also reached in June 2022. Fuel prices are becoming both a political problem for the Trump administration and a potential economic problem for the US. If traffic through the Strait of Hormuz remains as severely disrupted as it is today, the upward pressure on crude and oil products prices will continue to grow. This week, questions about the potential impact of higher fuel costs on the US and world economy have snapped into focus. President Trump argues that the strength of the US as an oil and gas producer will shield it from the adverse consequences of higher energy prices. “The amazing thing is, we don’t need the Hormuz Strait,” he said on Thursday. “We have so much oil, our country is not affected by this.” Scott Bessent, the Treasury secretary, conceded that there would be some pressure on US consumers, but suggested that the cost was worth paying for long-term security. “Many people, especially the Democrats, underestimate the will of the American people for short-term volatility for 50 years of safety that we are going to have on the other side of this,” he said. “I believe energy prices will be lower, inflation will be lower.” However, there are already signs that inflationary pressures are building as a result of higher oil prices. The Organisation for Economic Co-operation and Development this week forecast that US headline inflation would be 4.2% in 2026. Its previous forecast, from last December, was that it would be 3%. US 30-year mortgage rates have been on the rise, hitting their highest level since last October. Speculation that the Federal Reserve could start raising rates again has been one of the reasons. Austan Goolsbee, chairman of the Federal Reserve Bank of Chicago, said in a television interview this week that interest rates could be cut again several times this year, “if inflation behaves”. But he added: “I could see circumstances where we would need to raise rates if it was going a different way and inflation was getting out of control.” On Thursday, President Trump set a new deadline of 6 April for Iran to reopen the Strait of Hormuz, threatening to destroy the country’s power plants if it does not comply. If the threat to the strait is lifted, oil prices could fall quickly. If it remains closed, then a rise in oil prices to US$150 a barrel and beyond is quite possible. The Trump administration has reportedly been assessing the implications of oil reaching US$200 a barrel. President Trump said this week he had expected the price of oil to rise more sharply as a result of