Richmond Fed’s Barkin Says Gasoline Prices May Take Months to Fall Even if Hormuz Reopens

Thomas Barkin, president of the Federal Reserve Bank of Richmond, said it may take time for energy prices to stabilize even if the Strait of Hormuz reopens, underscoring concerns that inflation pressures could persist.

Walter Bloomberg reported on May 21 that Barkin said gasoline prices could take months to decline even if the strait is reopened.

Global crude prices have recently surged above $100 a barrel as tensions in the Middle East escalate and concerns over supply disruptions intensify.

The Strait of Hormuz is a critical oil shipping route through which about 20% of global seaborne crude flows.

Markets are also weighing the possibility that energy-price volatility could continue even after traffic through the strait returns to normal, as refining, transportation and inventory adjustments take time.

Within the Federal Reserve, concern has also been growing that higher oil prices could contribute to a renewed pickup in inflation.

Investors are closely watching how energy prices and any change in Fed monetary policy could ripple through global financial markets.