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 conflict with 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 [1]. 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. The last time the national average made a similar weekly jump was in March of 2022 during the start of the Russia/Ukraine conflict, according to AAA [1]. Gas prices may soon rise even higher. When crude oil was previously at this level, the average price of a gallon of gas in the U.S. Was $3.80 [1].

Strait of Hormuz Closure

The conflict has effectively closed the Strait of Hormuz, a vital waterway off the coast of Iran through which about 20% of the world’s crude oil and natural gas typically passes [4]. 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 [2]. Still, the number of tankers passing through the strait has dropped to zero since Wednesday [3].

Iran has similarly threatened to retaliate by striking U.S. Infrastructure in the region if its power plants are targeted [1]. Retaliatory Iranian missile attacks on oil and gas infrastructure in Gulf countries that host U.S. Military bases, such as Saudi Arabia, Qatar and the United Arab Emirates, have also impacted production and prices [4].

Trump Administration Response

President Donald Trump threatened to “obliterate” Iran’s power plants if Tehran does not fully reopen the Strait of Hormuz within two days [1]. 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 [3]. Bessent stated this was a deliberately short-term measure that would not significantly benefit the Russian government [3].

White House spokeswoman Taylor Rogers stated that President Trump had a strong game plan to keep the energy market stable and is reviewing all options [3]. The President has initiated measures including 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 [3].