If the war in Iran were to end, how soon would you feel free at the gas pumps? – Nationally
Consumers struggling with high fuel prices due to the Iran war may be wondering: with negotiations to end the war, how long will it take to feel relief once the conflict ends?
Since the war began about a month ago, fuel prices have risen sharply as a result of rising oil prices.
“If you don’t have fuel, I can fill you up because I don’t think you will see a solution to this in the next three, four, five days,” said Jon Allen, the chief executive of the organization. Bill Graham Center for Contemporary International History at the University of Toronto.
“I think if there will be negotiations, it will take time.”
About 20 percent of the world’s crude oil is choked in the Strait of Hormuz, a key shipping channel in the Persian Gulf region that Iran has used to its advantage by intimidating any US- and Israeli-allied ships that try to pass through.
At one point during the conflict, crude oil prices reached around US$120 per barrel.
Amid the instability of the ceasefire proposal negotiations and Iran’s rejection of the American proposal on Wednesday, the price continued to fluctuate but hovered around $90 as of publication.
“Electricity markets are notoriously volatile and it’s always been impossible to predict where things will go because it’s a market where small changes in supply can have big changes in prices, and a lot depends on how long that takes,” said Trevor Tombe, an economics professor at the University of Calgary.
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“We’re seeing a lot of movement in oil prices up and down, sometimes it depends on what the president is tweeting on one day or the other. So it’s really hard to see where we go from here, but it looks like oil prices have come down a lot over the last few days, with hopes for a possible peace.”
Where does the Iran war stand now?
On Wednesday, Iran rejected the idea that the war could be slowed down, let alone ended, anytime after receiving a US ceasefire proposal.
That came after Trump said on Tuesday the US was “in talks right now” with Iran.
At the same time, the Associated Press reports that at least 1,000 US troops are being sent to the Middle East in the coming days.
All of this uncertainty means that consumers should not expect electricity prices to drop anytime soon because the future of the Middle East conflict, and especially the timeline for the reopening of the Strait of Hormuz, is unclear.
“These things change every day,” Allen said.
“Donald Trump can say whatever he wants, and he can give whatever he wants, but if Iran doesn’t like it, it will take part in the Strait of Hormuz.”
When it comes to negotiations between the US and Israel and Iran, Allen says, “they are very far apart.”
This means the war may not end anytime soon, and even if a proposed ceasefire or an end to the war is in the works, consumers may be paying for the conflict weeks or even months afterward. That’s because there’s a ripple effect that higher prices for utilities like oil and fertilizer can have on the prices consumers end up paying for things like gas and groceries.
“A lot depends on how long oil prices last. With food, you usually see a six to nine month curve between the change in producer costs and the change in consumer prices,” said Tombe.
“If oil prices go back to where they’ve been, and I don’t believe anyone is predicting that will happen, instead of seeing affordability, we’re going to avoid affordability.”
– via file from the Associated Press
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