The U.S. average gasoline price rose again this week after a brief slide earlier in the month, reaching $4.54 a gallon on Wednesday—31 cents higher than a week earlier—according to AAA data cited by the Associated Press. The latest climb reflects how the Iran conflict has kept global oil supplies constrained near the Strait of Hormuz, a narrow shipping passage where a fifth of the world’s crude oil normally moves.
AP reported that the main driver of pump prices is the cost of crude oil, which flows through the gasoline market with relatively little delay. In the U.S., oil prices accounted for about 51% of what a gallon of gasoline cost in 2025, the Energy Information Administration said. When crude becomes scarce or traders price in disruption risk, gasoline costs typically follow.
AP also described how the Strait of Hormuz disruption changes the crude supply picture. Because crude is the main ingredient in gasoline, higher oil prices tend to translate into higher gasoline prices, and less oil available to buyers can tighten supplies further. The report said that Iran effectively shut the waterway during the war and that the International Energy Agency called it the largest supply disruption in the history of oil markets, pushing oil prices as high as $112 a barrel in early April.
The report said there was a window in mid-April when U.S. gasoline prices fell for nearly two weeks amid signals that the conflict could be winding down. Rob Smith, director of global fuel retail at S&P Global Energy, said the initial ceasefire announcement created “optimism that this really could be the beginning of the end of the conflict,” and that crude prices and gasoline spot prices dropped as a result. But AP reported that gasoline then reversed direction as hostilities over the strait deepened again.
Smith said the price pressure persists when the Strait of Hormuz remains constrained. He described a “fundamental shortfall” and said upward pressure on prices continues “every day the Strait of Hormuz is constrained,” adding that the passage was still “severely constrained.” AP said analysts expect any full return to earlier price levels to take time even if fighting eases.
AP also broke down how gasoline pricing works at the pump versus the inputs behind it. Gas station owners set retail prices, but the report said the crude cost, refining and distribution components, and other factors determine what station prices ultimately reflect. It said federal and state taxes contributed about 17% of the oil price, while refining costs and profits accounted for 14% and distribution and marketing added 17%, according to the EIA.
The AP report identified other events that can shift gasoline’s path, including U.S. actions aimed at Iran’s oil exports. It said that in April the U.S. blocked Iranian ports to stop Iran from exporting oil, quoting Jim Krane, an energy research fellow at Rice University’s Baker Institute, who said Iran’s unusually high oil exports had been moderating prices and that the blockade increased pressure not only on Iran but also on global oil prices. AP also quoted energy analysts saying the oil market can react quickly to news about ship attacks in the Persian Gulf or diplomacy talks stalling.
In weighing whether U.S. oil output could solve the problem, AP pointed to the fact that crude is traded globally and that U.S. refinery configurations affect how much domestic production can be used. It said nearly 70% of U.S. refineries are set up to process heavy, sour crude, while much of the oil produced domestically is light, sweet crude. AP reported that the American Fuel and Petrochemical Manufacturers said only about 60% of the oil processed in U.S. refineries comes from domestic fields and that retooling refineries would cost billions and require temporary shutdowns that could raise gasoline prices.
AP said no one can predict how high gasoline prices may climb next, noting that even in past periods of high prices the upward climb continued beyond early-May levels. Smith said any lasting resolution would still leave an industry risk premium associated with shipping through the region and could take months—or longer—to return to pre-war conditions. In his account, insurers and shippers would need time to accept risk levels similar to those in February, even if both sides commit to keeping Hormuz open.
Smith also said the longer the Strait of Hormuz flow remains hindered, the higher prices may go and the longer it could take for the market to normalize. He described ongoing difficulty convincing shippers and insurance companies that risk would be similar to February levels, suggesting the constraints have longer-lasting effects on pricing than the timing of headlines about diplomacy.