The cost of filling a gas tank in the United States is rising at its fastest pace in weeks, driven by the deepening war with Iran and the effective closure of the Strait of Hormuz, a maritime chokepoint for global oil. The national average for a gallon of regular gasoline hit $4.54 on Wednesday, up 31 cents from a week earlier and 52% above pre-war levels, according to AAA data. The spike interrupted a brief two-week decline in pump prices that followed hopes of a ceasefire in mid-April, only to reverse again as hostilities over the strait between U.S. and Iranian forces intensified.
The closure of the strait has stranded oil tankers, cutting off about a fifth of the world’s crude oil supply and creating what the International Energy Agency describes as the largest supply disruption in the history of oil markets. Crude oil prices — the main ingredient in gasoline — surged to $112 a barrel in early April before slipping below $100 on Wednesday amid signs the U.S. and Iran were moving closer to an initial agreement to end the war. “After the announcement of the initial ceasefire, there was kind of optimism that this really could be the beginning of the end of the conflict,” said Rob Smith, director of global fuel retail at S&P Global Energy. “And so crude prices came down correspondingly, gasoline spot prices followed, and the retailers lowered prices as well.”
But that relief proved temporary. As diplomatic efforts stalled and fighting around the strait continued, gasoline prices resumed their climb. “There’s a fundamental shortfall that will exist globally or fundamental struggle to meet that demand that will drive up price,” Smith said. “No matter what a government says or what any market person thinks, there is a true kind of upward pressure that’s being exerted on prices every day the Strait of Hormuz is constrained. And it is still severely constrained.”
Bob Kleinberg, an adjunct senior research scholar at Columbia University’s Center on Global Energy Policy, compared gasoline and crude price movements and found them tightly linked. “Not much of a mystery here,” he said. “It’s not exactly proportional but the shape of the curves follows the same pattern, and really with very little delay.” He noted the oil market “is exquisitely sensitive to what’s coming out of the White House,” with prices swinging on headlines about ship attacks or diplomacy. Federal and state taxes contribute about 17% of the pump price, while refining costs and profits add roughly 14% and distribution and marketing another 17%, according to the U.S. Energy Information Administration.
A U.S. move in April to block Iranian ports and prevent Tehran from exporting oil added another layer of upward pressure, said Jim Krane, energy research fellow at Rice University’s Baker Institute. “Iran had been moving an unusually high amount of oil to global markets, so that was helping moderate prices,” Krane said. “The Trump administration decides they’re going to punish Iran, and try to put more pressure on Iran by blocking their exports, so of course that does put pressure on Iran, but also puts pressure on global oil prices and forces them up.”
The global nature of oil markets means that even though the U.S. exports more crude than it imports, domestic drivers cannot escape the Strait of Hormuz turmoil. Nearly 70% of U.S. refineries are configured for heavy, sour crude, according to the American Fuel and Petrochemical Manufacturers, and just 60% of the oil they process comes from U.S. fields. Retooling refineries to run on domestic light sweet crude would cost billions and require prolonged shutdowns that would further raise prices.
Smith warned that even a durable peace deal would not quickly return pump prices to February levels. “Even if there was a true and lasting resolution of the conflict, both sides agree to play nice and truly do commit to keeping Hormuz open, it will still take months to get back to what it was pre-war, if not even longer,” he said. “There will still be within the industry a risk premium associated with going through that region. … It’ll be a long time before anyone can be convinced of that.”
The highest weekly gasoline price jump on record was 60 cents in March 2022 after Russia invaded Ukraine, AAA said. The current 31-cent weekly rise, while smaller, reflects a supply shock that analysts say has no quick fix. With Memorial Day travel weeks away, motorists face the prospect of the most expensive driving season in years.