Israel’s assault on Iranian nuclear and military targets last Friday, leading to
oil-price surge
and
airline-stock slump
, might add further hurdles for consumers maneuvering through an already
unusual summer travel season
.
The US reference crude oil, West Texas Intermediate, surged over 7% during Friday’s trade, whereas shares of American Airlines Inc., Delta Air Lines Inc., and United Airlines Holdings Inc. all fell by more than 3%.
About
half of the price
of a gallon of gasoline is determined by the cost of crude oil itself, according to the U.S. Energy Information Administration, and experts say motorists can expect gas prices to jump as soon as Saturday — but not by a considerable amount. Crude oil is also used to produce jet fuel, and airlines can pass on increased fuel costs to consumers in the form of pricier flight tickets.
See more
:
Travelers are waiting u
n
til the last minute to book trips. Here’s when that works — and when it can backfire.
“Travelers need to pay even more attention than normal to the geopolitical situation, no matter where they are traveling these days,” said Clint Henderson, managing editor of the Points Guy travel website. “There is a lot of global uncertainty at the moment, so travelers should keep in mind the adage ‘knowledge is power.’”
Fuel costs anticipated to increase, yet stay notably affordable.
Gasoline prices might increase by 10 to 25 cents per gallon within the coming few weeks due to Israel’s assault, according to Patrick De Haan, an oil analyst at GasBuddy. As of Friday, the nationwide average cost per gallon stood around $3.10, which is approximately 35 cents less than what it was during the same period last year, based on information provided by GasBuddy. Therefore, should De Haan’s forecast come true, gasoline costs will remain fairly modest compared to previous years, particularly with children finishing their schooling and many families embarking on summer travels.
De Haan suggested that markets might be exaggerating their response slightly to Friday’s incident. Unless there is a significant increase in tensions in the Middle East, he believes that consumers shouldn’t be concerned about fuel prices surging dramatically in the coming period.
“If a Category 5 hurricane hit Texas or Louisiana, it would have a much greater effect on prices than what we’re seeing now,” De Haan pointed out.
A representative from AAA, Aixa Diaz, mentioned she isn’t hurrying to the gas station to refill her vehicle. She pointed out that it would require a significant increase in crude oil prices to return to the gasoline price levels seen last year.
We don’t aim to alarm anyone into believing their road trip will be spoiled,” Diaz stated. “However, expect to pay a few extra cents over the coming days.
See more
:
Oil prices jump up to 14%, U.S. stock futures decline as Israel attacks Iran
Nevertheless, Diaz continued to monitor oil prices. On Friday afternoon, the cost per barrel of crude oil stood at approximately $72, following an increase up to $77 due to reports of Israel’s assault. She noted that if those figures climbed to around $80 or even $90, drivers would likely begin observing a significant surge in costs.
Travelers might face higher airfares down the line.
Henderson of the Points Guy doesn’t expect Israel’s strike on Iran to have a big impact on international travel, except for travel to and from the Middle East. The airspace over Iran, Iraq, Jordan and Syria was empty as of Friday afternoon, data from Flight Radar showed, causing airlines to divert and cancel flights.
International airlines like Israel’s El Al and Dubai’s Emirates will be hit hardest, according to Henderson. The closure of the airspace necessitates longer flight paths, resulting in increased fuel expenses for these extended routes.
Air India, which is still grappling with the consequences of the
deadly Boeing
787 Dreamliner crash
On Thursday, the situation will also be affected as numerous flight paths go above Iran. At present, the carrier isn’t operating over adjacent Pakistan as well; historical hostilities between the nations have escalated lately.
See more
:
Airlines see their stock prices drop as the ongoing strife between Israel and Iran adds more hesitation among travelers.
Some people might reconsider their trips to Israel or the [United Arab Emirates], but I doubt this would cause many Americans to cancel their travel arrangements to Europe, say,” Henderson stated. “However, should the situation escalate significantly, then everything becomes uncertain.
Higher oil costs might also drive up airfare prices. According to the U.S. Energy Information Administration, from each 42-gallon barrel of crude oil processed by American refineries, approximately 20 gallons become regular gasoline, between 11 and 13 gallons turn into diesel fuel, with around three to four gallons ending up as jet fuel on average.
Henderson pointed out that fluctuations in jet-fuel costs may not immediately reflect in ticket prices, potentially taking several months to do so. Additionally, airlines might introduce a fuel surcharge on tickets if oil prices stay elevated over time; however, this change would probably occur after some delay, as he explained.
Certain airlines opt to absorb the higher expense of more expensive jet fuel in order to stay competitive.
“It will impact airlines’ profitability; nonetheless, a prolonged rise in oil prices will ultimately be transferred, albeit partly, to consumers,” Henderson stated.
Ways to safeguard your global journey
Experts suggest that American travelers heading overseas should think about the
Smart Traveler Enrollment Program
(STEP) is a complimentary service available exclusively to U.S. citizens and nationals, enabling the State Department to promptly reach out during emergencies. Additionally, this program offers up-to-the-minute information regarding health advisories, weather conditions, safety measures, and security concerns specific to the region you’re visiting.
It’s always wise to think about getting travel insurance, however remember that many basic travel policies do not cover travel warnings, as well as losses resulting from war or actions deemed acts of war, according to Daniel Durazo, who serves as the external communications director for Allianz Partners USA, a travel-insurance provider.
Review your travel insurance policy for a list of “included circumstances” or scenarios that the policy will cover. Certain providers provide an option allowing travelers to cancel for any reason—such as the Allianz Cancel Anytime add-on, which may refund up to 80 percent of unrecoverable pre-paid expenses due to cancellation under nearly all conditions not already addressed in your current plan.
See also:
Luxury travel benefits such as access to VIP lounges and reward points aren’t as valuable as they once were, yet these enhancements can still be beneficial.
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