Gasoline prices in the United States surged to a national average of $3.48 per gallon on Monday, marking a 48-cent increase in just one week, according to data from AAA. The price jump follows the escalation of the conflict between the U.S., Israel, and Iran, which has disrupted oil markets and raised concerns about supply disruptions.
The primary source of the price increases is the effective shutdown of the Strait of Hormuz, a critical waterway carrying approximately 20% of the world’s oil shipments and a similar percentage of global liquified natural gas. Most of the oil transiting the strait originates in Saudi Arabia and Iraq. The near-total closure, which began in early March, has constricted the flow of crude oil to international markets.
While the average national price reached $3.48, regional variations are significant. California currently faces the highest prices, with an average of $5.20 per gallon, followed by Washington state at $4.63. Kansas offers the lowest average price in the country, at $2.92 per gallon. These disparities reflect differing state taxes, distribution costs, and regional supply dynamics.
Crude oil prices experienced volatility early Monday, with both West Texas Intermediate (WTI) and Brent crude briefly exceeding $120 per barrel before retreating. WTI settled at $94.77 and subsequently fell below $85, while Brent crude settled at $98.96 and continued to decline toward $95. Despite the pullback, the initial spike underscored the market’s sensitivity to the geopolitical situation in the Middle East.
The International Energy Agency (IEA) responded to the rising prices on March 11 by announcing the release of a record 400 million barrels of oil from its emergency reserves. This represents roughly four days of global oil production and is intended to mitigate potential shortages. The IEA, comprised of 32 member countries, hopes the release will curb soaring crude prices and stabilize the market.
The price of diesel fuel has too risen sharply, increasing nearly 89 cents over the past week to $4.66 per gallon. Diesel inventories are currently tighter than those for gasoline, contributing to the steeper price increase. This impacts not only trucking and transportation costs but also industries reliant on diesel-powered equipment.
President Trump, speaking to CBS News, stated the U.S. “could do a lot” regarding the Strait of Hormuz and threatened Iran if it continues to block the waterway. He also suggested the conflict could conclude soon, claiming the U.S. Is “highly far ahead of schedule” and that Iran has “nothing left” in a military sense. The White House, in a separate statement, asserted it has a “strong game plan to keep the energy markets stable.”
Economists warn that the war’s impact extends beyond fuel prices. Wayne Winegarden, an economist at the Pacific Research Institute, noted the conflict is “putting upward pressure on prices for gasoline, electricity, and groceries through higher transportation, packaging and fertilizer costs,” exacerbating affordability challenges for families already facing a high cost of living. The war has effectively closed shipping lanes, impacting the flow of commodities.
As of March 13, the conflict had reportedly cost U.S. Taxpayers upwards of $11 billion, a figure that excludes pre-war troop deployments and naval positioning. The State Department has allocated funds for the evacuation of tens of thousands of American citizens stranded in the Middle East following the outbreak of hostilities. Military costs are expected to escalate as the conflict continues, potentially influencing President Trump’s decisions given the approaching midterm elections and indications the war is damaging Republican prospects.
