Gas prices at U.S. pumps spiked above $4 a gallon for the first time since the summer of 2022, as the war in Iran sends oil costs surging.
The national average price for a gallon of gas was just over $4.01 on Tuesday, according to AAA. The last time that happened was during the inflationary surge in 2022, fueled by pandemic concerns and Russia’s invasion of Ukraine. At that time, the price for a gallon eventually climbed above $5.
That could be coming for American drivers again, as the war rages on.
Early Tuesday, a Kuwaiti tanker laden with oil was struck in Dubai’s waters, authorities in the United Arab Emirates said, in an apparent illustration of Iran’s willingness to continue targeting energy assets. Kuwait Petroleum Corp., blaming Iran for the strike, said that the tanker caught fire but that there were no casualties.
The critical Strait of Hormuz, linking the Persian Gulf to the Gulf of Oman, is effectively closed to maritime traffic. Because about one-fifth of the world’s oil and natural gas flows through the strait, the disruption has spiked oil prices, causing countries to tap into reserves and start rationing in some parts of the world.
President Donald Trump urged countries suffering from fuel shortages to buy from the U.S. because “we have plenty” in a post Tuesday morning on Truth Social. He also repeated his call for other nations to help secure the strait, telling them to “build up some delayed courage, go to the Strait, and just TAKE IT.”
The price of a barrel of Brent crude, a global benchmark, was trading at roughly $106 per barrel Tuesday morning. Natural gas prices in Europe and Asia have also surged in the past month, fueling economic anxiety and roiling global stock markets.
In Asia, which is more reliant than other regions on fuel that passes through the Strait of Hormuz, governments have been left scrambling for alternatives, with several countries announcing emergency plans to conserve energy. Nations around the world have also introduced measures such as remote working, subsidies and price caps to protect consumers, according to the International Energy Agency.
The United States is not at immediate risk of an oil shortage, but because the market is global, the disruptions are sending prices at the pump to levels not reached in years.
The cost of gasoline varies widely throughout the country. Prices are especially high on the West Coast.
Rising fuel costs are one of the most visible signs of the economic effects of the war because so many Americans drive and pass pumps on a daily basis, said Diane Swonk, chief economist at KPMG. But gas prices are not the only effects American consumers will feel — soon, grocery prices are expected to rise, as the cost of transporting and manufacturing goods goes up.
“This is only the beginning,” Swonk said.
Rising prices and geopolitical turmoil are making their way into consumers’ psyches, sending a closely watched measure of economic sentiment down nearly 6 percent in March.
President Donald Trump said Monday that the U.S. is making “great progress” in discussions over terms for ending the war — though Iran has denied virtually all of his assertions.
Experts caution that even if the strait begins functioning again soon, it will take months for the oil supply chain to recover. Campbell University maritime historian Sal Mercogliano said recovery would take about one week for every day the strait has been blocked. (The blockage has now lasted about a month.)
He called the global oil market an interconnected web.
“If you sever one of the legs of the web, the other ones assume the weight,” he said.
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