New York CNN –
U.S. oil prices climbed above $90 a barrel for the first time in 10 months on Thursday, which could push gasoline prices even higher and stoke inflation across the economy.
High oil prices have already created an unusual situation in which gasoline continues to become more expensive even after the end of the summer driving season. Despite the slowing demand, gas prices are only a few cents away from their annual peak.
The national average for regular gasoline rose to $3.86 per gallon on Thursday, according to AAA. That’s six cents more than a week ago and 16 cents more than on the same day last year.
The recent rally in the oil market has been driven by supply concerns.
First, Saudi Arabia and Russia surprised the market last week by extending their aggressive supply cuts through the end of the year.
Then the catastrophic flooding in Libya raised concerns about supply disruptions in that OPEC country. At least 5,000 people have died in Libya and thousands more are feared missing.
“If all supply in Libya were taken off the market for an extended period of time, that would drive prices even higher,” said Andy Lipow, president of consulting firm Lipow Oil Associates.
Libya, a key supplier to Europe, produces about 1 million barrels of oil per day, according to OPEC. Most of this crude oil comes from the same light, sweet variety found in Texas, New Mexico and elsewhere in the United States.
“If you lose that supply in Europe, prices there will go up and it will attract even more barrels from the U.S. to fill the gap,” Lipow said.
U.S. crude oil traded as high as $90.26 a barrel on Thursday morning, up 2% on the day. This is the highest intraday price since November 8, 2022 and also represents a 34% increase since mid-June.
Brent crude, the global benchmark, climbed 2% to a new 10-month high of $93.68 a barrel on Thursday.
The recent rise in energy prices is erasing some of the progress central banks have made in fighting inflation.
Two inflation reports released this week showed prices rose more than expected in August, driven in large part by rising gas prices. Energy prices have only increased so far this month.
There are now a dozen states where regular gasoline averages $4 or more per gallon, including Colorado, North Dakota and California, according to AAA.