Gas Prices Surge as Iran Conflict Disrupts Global Oil Supplies
Gas prices are surging across the United States as the fallout from the U.S.-Israeli attacks on Iran continues to disrupt global oil supplies. The national average for a gallon of regular gasoline jumped by 14% in a week to $3.41 on Saturday, according to data from AAA.
The price was under $3 a week ago, but the conflict has severely disrupted oil flows through the Strait of Hormuz, sending crude oil above $90 a barrel. Natural gas prices in Europe have risen even more sharply.
Strait of Hormuz Closure and Iranian Retaliation
The conflict has effectively closed the Strait of Hormuz, a vital waterway through which about 20% of the world’s crude oil and natural gas typically passes. Iran initially threatened to attack any vessel traveling through the strait, but a Revolutionary Guard spokesman stated on Saturday that it would remain open to all traffic except U.S. And Israeli ships.
“We did not close the Strait of Hormuz and will not, but we will target ships belonging to the U.S. Regime and the Zionist entity transiting the Strait of Hormuz,” the spokesman said, according to the Wall Street Journal.
Nevertheless, the number of tankers passing through the strait has dropped to zero since Wednesday, Reuters reported.
Retaliatory Iranian missile attacks on oil and gas infrastructure in Gulf countries hosting U.S. Military bases, such as Saudi Arabia, Qatar, and the United Arab Emirates, have also impacted production and prices.
Trump Administration Response and Market Impact
President Trump made affordability a central plank of his 2024 campaign, and in his State of the Union address late last month, he boasted about his Administration’s ability to keep gas prices down. He claimed gasoline prices, which reached a peak of over $6 a gallon under his predecessor, were now below $2.30 in most states and even $1.85 in Iowa.
However, in an interview with Reuters this week, he dismissed concerns about rising prices, stating, “I don’t have any concern about it. They’ll drop very rapidly when this is over, and if they rise, they rise, but this is far more important than having gasoline prices move up a little bit.”
In response to the rising gas prices, Treasury Secretary Scott Bessent issued a 30-day waiver on U.S. Sanctions on the sale of Russian oil to India, in a bid to increase supply. In a post on X, Bessent added that the “deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea.”
White House spokeswoman Taylor Rogers told TIME that President Trump had a strong game plan to keep the energy market stable and would continue to review all options. She added that the President had initiated measures such as providing political risk insurance for cargo ships in the Gulf, offering U.S. Navy escorts if necessary, and temporarily freeing up sanctioned oil to alleviate pressure in the global market.
Background: The Strait of Hormuz
The Strait of Hormuz is the only maritime passage out of the Gulf and a route for about a quarter of the world’s liquefied natural gas and seaborne trade. Shipping is confined to two-mile-wide lanes, one for inbound and one for outbound traffic, separated by a two-mile-wide meridian. At its narrowest, the strait is just 21 nautical miles wide, constrained by the coast of Iran and the Musandam peninsula in Oman.