Payam Javan: U.S. oil prices shot above $90 a barrel for the first time in 10 months, a bad sign for the Federal Reserve. The surge in oil prices is expected to push gasoline prices up even higher and worsen already rising inflation rates across the economy.
The spike in oil prices is being driven by concerns over the security of global oil supplies. Saudi Arabia and Russia have extended their aggressive supply cuts through the end of the year, and major flooding in Libya has raised concerns about a disruption in supply from the oil-exporting nation.
The rise in oil prices is expected to have a significant impact on the U.S. economy. Gasoline prices are nearing their record high for the year, and the energy index overall increased by 5.6 percent in August. This is likely to put a strain on household budgets and contribute to further inflation.
The Biden administration has acknowledged the spike in gas prices and is in touch with oil and gas industry executives to ensure the security of supply. However, it is unclear what the administration can do to bring down prices in the short term.
Industry analysts are still hopeful that the national average gas price will start to decline in the coming weeks.