Motorists and airline passengers across the United States and around the world are feeling the aftershocks of President Donald Trump’s military intervention in Iran as fuel prices surge and market analysts warn they are poised to soar further.
The average cost of a gallon of regular gasoline in the U.S. increased by 34 cents in the last week to $3.32 on Friday, according to AAA. The cost of diesel has grown even more significantly and analysts expect the price of both fuels to keep climbing.
When oil prices first jumped after Trump launched military strikes against Iran last week, energy analysts expected them to soon stabilize, reasoning that political and economic pressures would quickly force a diplomatic end to the conflict. But the U.S. and Israel continue to strike targets in Iran and the Iranian military has launched drones at energy infrastructure in nearby countries, including Saudi Arabia and Qatar.
On Friday, Qatar’s energy minister, Saad Sherida al-Kaabi, sent oil prices spiraling further upward when he warned in an interview with the Financial Times that the continuing hostilities will trigger a halt in oil production throughout Persian Gulf states “within days” and “bring down the economies of the world.” He said that oil could soon reach $150 per barrel — more than double the price before Trump launched strikes on Iran last weekend.
That would likely mean U.S. gas prices shooting up to their peaks following Russia’s invasion of Ukraine in 2022, when they hit $5 per gallon on average.
“If the Trump administration does not do something to restore confidence in ships traveling through the Strait Hormuz, these prices are going to keep heading up,” said Patrick De Haan, head of petroleum analysis for the pricing app Gas Buddy, referring to the shipping choke point along Iran’s south coast where hundreds of tankers are sitting idle.
“I don’t wake up too many mornings and get the chills when I look at the morning oil price numbers,” De Haan added. “It’s starting to feel like 2022 all over.”
Alex Jacquez, policy chief at the economic think tank Groundwork Collaborative, said Trump’s apparent determination to continue the conflict has forced energy market watchers to take a more pessimistic view of its likely duration and impact.
“The markets are starting to realize there may be no off-ramp here,” said Jacquez, who advised the Biden White House on energy issues. “There was this thinking that if oil prices start to soar that Trump would back down in Iran. But that is not the way things are aligning. The president has shown no appetite for changing course.”
On Friday, the president wrote on social media that “There will be no deal with Iran except UNCONDITIONAL SURRENDER!”
The pain from spiking oil prices is set to extend far beyond gas station fuel pumps. United Airlines CEO Scott Kirby said at a conference Friday that airfare prices could quickly gain altitude as his company confronts runaway jet fuel costs. Shipping prices are also likely to go up considerably, forcing businesses of all kinds to increase prices.
“Transportation is a big part of our business,” said Travis Maderia, co-founder of New York-based LobsterBoys, which ships live lobsters around the world. “When the airline prices go up, the cost of sending lobsters overseas can be dramatically impacted.”
Oil and its derivatives are also a crucial ingredient for other industries, including plastics, semiconductor chips and gases used in manufacturing. All could become costlier to produce as the Iran conflict continues, ultimately raising prices for other businesses and consumers.
Iran’s ability to launch relatively low-cost drones at nearby energy infrastructure has made oil and gas production more vulnerable than in previous conflicts in the Middle East, said David Doherty, head of natural resources research at market research firm BloombergNEF. “Defending the same breadth of space has become much more difficult than it was in the past. It is harder to protect oil infrastructure,” he said.
The Trump administration’s moves to calm energy markets have so far had little apparent success.
Treasury Secretary Scott Bessent said in a post on X Thursday that India was given a 30-day waiver on a previous agreement that it would not purchase oil from Russia. He said on Fox News on Friday that the U.S. may “unsanction” more Russian oil.
Earlier this week, Trump said in post on Truth Social that the U.S. government will offer to sell shipping companies political risk insurance intended to give them confidence to send tankers through the Strait of Hormuz again, or even provide military escorts for vessels passing through the choke point.
Market research firm Macquarie said in a note to clients Friday that it was unclear how reliable that offer was. Escort “vessels are often unavailable due to other military priorities such as missile intercepts or striking Iran,” it said.
The firm warned in the same note that the world might soon endure a massive energy price shock. “The timeline for an extremely large oil price move is very short,” the firm wrote. “A few weeks of Hormuz closure will create a domino effect of events that could push crude to $150 or higher.”
The longer oil and gas remain stranded near the Strait of Hormuz, the more difficult it becomes to return oil production in the region to levels before the war.
Gulf states are expected to be forced to pause production soon because there is nowhere to send their oil. Fossil fuel facilities can take weeks or longer to restart again.
“It is not as simple as flipping a switch back on,” said Vidya Mani, a visiting supply chain scholar at Cornell University’s SC Johnson College of Business. “You have to get drilling operations going again. You have to get workers back in. When there is a conflict like this, workers leave and the number that come back in may not be as many as you need.”
Mani is among those who now envision oil prices may shoot up to $150, similar to prices last seen in July of 2008. But she added that the economic pain from such high prices could change the course of the conflict quickly, by creating immense pressure on the U.S. and Israel to wind down their attacks.
An extended energy crisis could put Trump under pressure both from allies around the world and domestically. Most Americans felt health care, new cars and new homes were unaffordable in a Washington Post-ABC News-Ipsos poll last month. Republicans have tried to make lowering the cost of living a central plank of their platform for this year’s midterms.
For now, Trump and his administration have shown no sign of changing course. Jacquez, of Groundwork Collaborative, said a painful, sustained increase in energy costs like that triggered by Russia’s full-scale invasion of Ukraine now appears increasingly likely.
“It feels almost the same,” said Jacquez, who advised the Biden White House on the energy and natural resources supply chain disruptions from Russia’s invasion. “Except in 2022, we didn’t choose to do this ourselves.”
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