Iran War Fuels Rising Gas & Jet Fuel Prices: Price Gouging Concerns Grow

With the Iran war entering its fifth week, consumers are facing significant financial strain due to surging energy costs. Concerns are mounting among lawmakers regarding potential price gouging, even as experts point to substantial supply disruptions as the primary driver of price increases.

Traffic through the Strait of Hormuz, a crucial maritime shipping route for global oil supplies, remains largely halted, resulting in what is being described as the largest oil supply disruption in history.

Oil prices have increased by more than 40% since the start of the U.S.-Iran war on February 28, 2026, leading to price spikes for gasoline and jet fuel. Brent crude, the global benchmark for oil, briefly exceeded $112 a barrel on Friday before settling to approximately $103 as of Tuesday morning. Gasoline prices have risen to a nationwide average of $3.98 a gallon as of Tuesday, representing a 35% increase from a month ago, according to AAA.

Jet fuel prices have surged by approximately 106% compared to a month ago, according to the International Air Transport Association, based on data from the week ending March 20, 2026. Several airlines have announced plans to increase fares or implement fuel surcharges on tickets.

Senator Elizabeth Warren (D-Mass.) is urging the Federal Trade Commission to investigate potential price gouging by businesses capitalizing on the conflict.

“We write regarding our concerns that big corporations may seek to profit off President Trump’s war against Iran by unfairly raising prices for American consumers,” Warren and several other lawmakers wrote in a letter sent Tuesday to Andrew Ferguson, chair of the FTC, and shared exclusively with CNBC.

The letter, also signed by Senators Richard Blumenthal (D-Conn.) and Ed Markey (D-Mass.), and Representatives Jan Schakowsky (D-Ill.) and Chris Deluzio (D-Pa.), warns that corporations may exploit the uncertainty to increase prices beyond what is justified by actual input cost increases, potentially engaging in price gouging.

Price gouging is defined as sellers expanding their profit margins by raising prices more than necessary to cover higher input costs.

In 2025, Senator Warren introduced the Price Gouging Prevention Act to grant the FTC greater authority to pursue alleged abuses. The legislation has been under review by the Senate Committee on Commerce, Science and Transportation since mid-July. A similar bill co-sponsored by Warren in 2024 failed to pass.

The lawmakers expressed particular concern about potential price gouging in the oil, gasoline, and fertilizer markets. However, they also noted that rising input costs could lead to downstream price increases in other industries, including food and airlines.

It takes approximately five to six weeks for crude oil to be processed into gasoline and delivered, according to Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University. “That means that gasoline moving out of refineries based on higher-priced crude oil they received after the war started is only now starting to be shipped to gasoline stations.”

However, some wholesale dealers may be purchasing gas on the spot market, which could result in an immediate price spike, Jaffe added.

Ken Medlock, senior director at the Center for Energy Studies at Rice University’s Baker Institute, stated that there is no evidence of price gouging. “In fact, the changes in prices at the pump are consistent with historical norms, given the rapid change in crude oil price.”

Medlock emphasized, “The issue is that this is the largest nominal price increase we have ever seen in such a short period of time.”

The extent to which price gouging may be contributing to airfare increases remains unclear.

Jet fuel prices represent a significant cost for airlines, accounting for approximately 25% of total operating expenses (excluding labor), according to an analysis of federal data by Jason Miller, a professor of supply chain management at Michigan State University.

Scott Kirby, CEO of United Airlines, wrote in a March 20 note, “If prices stayed at this level, it would mean an extra $11 billion in annual expense just for jet fuel.”

Higher operational costs will inevitably translate into higher airfares, according to Helen McDermott, director of global forecasting at Tourism Economics.

However, the impact on airfares will vary by airline, with low-cost carriers potentially being more affected due to jet fuel costs representing a larger share of their total costs.

David Goodger, a managing director and head of tourism forecasting at Tourism Economics, told CNBC he expects airfares to rise “more than would otherwise be the case” due to the war in Iran. “While the outlook remains uncertain, we expect air fares will be 5-10% higher than we previously expected over 2026 and 2027,” Goodger wrote in an e-mail.

Airlines may implement additional fuel surcharge fees in response to prolonged spikes in fuel costs, Goodger added.

Courtney Miller, founder of Visual Approach Analytics, an airline industry advisory firm, previously told CNBC, “Airlines love to say fuel is expensive so you have to pay more. What they’re doing is they’re setting the expectation. They price to prevent empty seats.”

there are “too many unknowns” surrounding the Iran war and its impact on energy markets to accurately predict airfare impacts, according to Katy Nastro, a spokesperson at Going, a flight deal provider.

There may also be an element of panic-buying among consumers, further exacerbating price increases, said Nastro.

Average airfare for travel between April 20 and May 17 — the period after spring break but before summer — has increased by approximately 10% to 15% at the median, relative to prices before the war started, Nastro said.

Fares for summer travel are up even more — about 18% — versus a year ago, she said.

“We’re taking the temperature check, and it’s not looking good” for airline prices, Nastro said. “The temperature is rising.”