April 24 (Reuters) - Norfolk Southern ( NSC ) reported a fall in first-quarter profit on Friday, as higher operating costs coupled with rising fuel prices weighed on the railroad operator's earnings.

Fuel prices have climbed sharply in the wake of U.S.-Israeli war on Iran, adding pressure to margins across energy-intensive sectors including transportation and logistics.

U.S. average gasoline prices rose above $4 a gallon in March for the first time in more than three years, marking the steepest monthly increase in decades.

Chief Executive Mark George said the company navigated the quarter but flagged impacts from a "dramatic rise" in fuel prices in March, severe winter weather and a rapidly shifting macroeconomic environment.

U.S. railroad operators have seen operating costs rise as labor and maintenance expenses remain high, safety spending increases and severe weather disrupts networks.

Railway operating revenue for the first quarter remained flat at $3 billion compared with a year earlier. Railway volumes dropped 1% year-on-year.

Atlanta, Georgia-based Norfolk reported an adjusted profit of $2.65 per share for the quarter, compared with $2.69 per share a year earlier.

On an adjusted basis, the company's operating ratio, a key measure of efficiency, worsened by 80 basis points to 68.7% from a year earlier.

Union Pacific, which signed an $85 billion deal to buy Norfolk last year, said on Thursday it expects a surge in fuel prices triggered by the conflict in the Middle East, to pressure the railroad operator's margins.