Higher fuel prices pinch budgets beyond the gas pump during Iran war

As the U.S.-Iran war enters its fifth week, consumers are facing economic consequences that impact everything from travel planning to mail delivery.

Companies and other organizations are increasingly preparing for an environment in which the conflict — and subsequent jolt to crude prices — evolves from an unexpected shock into a long-term challenge. As corporate policies change, Americans will feel it in their wallets beyond the gas pump.

Many companies tie these adjustments to surging oil prices, with the blockage of the key Strait of Hormuz passageway depressing supply. Prices on the May contract for Brent — a global benchmark for oil prices — have surged more than 55% in March, on track for their biggest monthly gain on record going back to 1998. U.S. oil prices are up slightly less, logging a 49% increase month to date.

The U.S. Postal Service said Wednesday that it was looking to slap a temporary 8% fuel surcharge on package and express mail deliveries. The tax, which needs regulatory approval, would begin in late April and last into early 2027, the USPS said.

“This temporary price adjustment will provide needed flexibility for the Postal Service by helping to ensure that the actual costs of doing business are covered, as required by Congress,” the Postal Service said in its announcement.

The Postal Service said its charge was lower than those issued by competitors. FedEx and UPS raised their fuel surcharge fees following the U.S.-Israeli strikes on Iran, CNBC previously reported.

United Airlines said it would cut back on running some lower-profit flights in the coming quarters as fuel costs jump, according to a memo from CEO Scott Kirby. Routes that take place midweek, Saturday and overnight are among those targeted.

The Chicago-based air carrier is planning for oil to hit $175 a barrel and remain above the closely followed $100 mark through the end of next year. United’s fuel bill could increase by $11 billion at those prices, which would be more than double what the company earned in profit in its top years, Kirby said.

Travelers should prepare to pay more for tickets as a result of higher fuel costs, Kirby told CNBC’s Phil LeBeau this week. Oil is the second-biggest expense for the company, behind labor, he said.

“I think fares will continue to go up in line with oil prices,” Kirby said. “In any business, but certainly in airlines, you’ve got to pass through the costs of the inputs.”

Elevated oil prices can push up production costs for 3M products, CEO William Brown said at an industry conference earlier this month. He said the Command and Post-it parent could institute price hikes, similar to those implemented following President Donald Trump’s tariff policy rollout nearly a year ago.

“If the price of oil stays elevated, we’re going to have to take action like we had to do last year and be responsive on pricing,” Brown said.

DoorDash and Lyft rolled out “relief” programs this week that included expanded reward offerings at gas stations. Advocates for gig-work platform drivers say these workers don’t have the same ability to adjust rates when costs spike as other independent contractors.

“Drivers are feeling the cost of rising gas prices, which ultimately impacts their earnings,” Yuko Yamazaki, Lyft’s head of driver, said in a statement.

The average price of unleaded gas in the U.S. has jumped near the $4 mark, a roughly 33% increase from a month prior, according to AAA. The organization said the last time gas prices were this high was during Russia’s invasion of Ukraine in 2022.

Americans are growing less confident about the economy as they brace for higher inflation, according to data from the University of Michigan’s Surveys of Consumers released Friday. The headline index fell almost 6% in March to one of its lowest levels on record.

“War worsens consumers’ feelings about the economy. This isn’t a shocking revelation,” said Elizabeth Renter, senior economist at financial education platform NerdWallet. “When we go to war, people anticipate worsening economic constraints, including higher prices.”

— CNBC’s Dan Mangan and Jeff Cox contributed to this report.