According to data from two price-tracking services, AAA and GasBuddy, the average price of gasoline in the United States has broken through the $3.50 per gallon mark, reaching its highest level since May 2024. Concerns over supply have been triggered by the conflict involving Israel, the United States, and Iran.
Global fuel prices are rising due to disruptions in the export of Middle Eastern oil through the Strait of Hormuz. This situation is likely to strain consumer budgets and act as a drag on the global economy.
This could represent the most significant risk for US President Donald Trump and the Republican party heading into the midterm elections in November. President Trump's promise to reduce energy prices is a key element of his 2024 re-election campaign.
The impact of geopolitical shocks on consumer finances is not a matter of months. "It only takes days," said Bill Stern, CEO of Cardiff, a US-based small business lender. "You feel it the moment you fill up your tank while driving your kids to practice."
Since President Trump's decision on February 28th to join Israel in strikes against Iran, the average US retail gasoline price has increased by nearly 60 cents. On March 5th, the price reached $3.58 per gallon.
This rapid 20% increase in just 11 days is comparable to the price surge that followed the outbreak of the Russia-Ukraine war four years ago. It represents an unprecedented rate of increase. Further price hikes may follow as more ships are attacked in the Strait of Hormuz and as the US transitions to summer-grade gasoline, which burns cleaner but is more expensive to produce.
Denton Cincigrana, Chief Oil Analyst at Oil Price Information Service, stated that spot and wholesale gasoline prices recorded double-digit gains on Wednesday.
Changes in wholesale prices are typically reflected at the pump the following day.
The price of crude oil, which constitutes the largest component of fuel prices, also rose on Wednesday. This occurred despite a proposal from the Paris-based International Energy Agency (IEA) to release 400 million barrels of oil.
Cincigrana noted that the IEA's announcement about the oil release raised more questions than it answered, as the organization did not specify who would release the oil or when it would happen.