Escalating military conflict between the United States and Iran has pushed the average price of gasoline in the U.S. back above the $4 per gallon threshold.
Data from the American Automobile Association shows the national average price for regular gasoline reached $4.003 on July 20, marking an increase of approximately 13 cents from the previous week and significantly higher than the $3.14 average seen during the same period last year.
Key Drivers Behind the Price Surge
The current price surge stems from the breakdown of a U.S.-Iran ceasefire and the subsequent intensification of military actions by both sides.
The U.S. has conducted airstrikes against Iran for multiple consecutive nights, while Iran has retaliated by targeting U.S. military assets in the Middle East and announcing the closure of the Strait of Hormuz.
As a critical chokepoint for roughly one-fifth of global oil trade, traffic through the Strait of Hormuz has plummeted.
Data indicates only four vessels transited the strait on July 19, down from eight the previous day.
This has fueled a sharp rise in international oil prices, with Brent crude futures gaining over 15% last week and briefly surpassing $90 per barrel during trading on July 20.
Regional Price Variations and Diesel Trends
Significant regional price disparities exist across the United States.
The average price in California has climbed to nearly $5.50 per gallon, with Hawaii and Washington state also exceeding $5.
In contrast, Indiana's average sits around $3.35.
The increase in diesel prices has been even more pronounced, with the national retail average for diesel now above $5 per gallon, representing a rise of over $1.30 compared to July of last year.
Broader Market Pressures
Patrick De Haan, head of petroleum analysis at energy analytics firm GasBuddy, notes that the current price increases are not solely due to the Middle East conflict.
They are compounded by ongoing Ukrainian attacks on Russian refining facilities, which are putting further strain on global refining capacity.
Analysts suggest that with tensions in the Middle East expected to persist, U.S. gasoline prices are likely to face continued upward pressure in the coming weeks.