Fuel Market Structure, Government Interventions Led to Varied Iran War Consumer Impacts, IEA Says

The structure of individual domestic fuel markets and the extent of government intervention determined the varied impacts from the Iran war's oil price surges on consumers, the International Energy Agency said in a commentary on Thursday. The closure of the Strait of Hormuz following the outbreak of the Iran war plus damage to Middle East energy infrastructure caused oil prices to surge, with physical prices briefly approaching $150 a barrel. "Yet the surge in international oil prices did not translate into uniform increases of equal magnitude at the pump. How strongly consumers felt the impact of the crisis in their wallets depended heavily on the structure of domestic fuel markets and the extent of government intervention," the agency said. "Data show that the connection between wholesale fuel prices and what consumers pay is generally stronger in advanced economies than in emerging and developing countries." While crude prices eased to their pre-war levels following the mid-June interim agreement between the US and Iran, diesel and gasoline prices have remained around 30% higher than before the war. In the US, lower excise taxes compared to other OECD countries mean that.