The national average retail price of gasoline crossed $3.50 a gallon this week to hit its highest since May 2024, data from price tracking services AAA and GasBuddy showed, as the Israel-U.S. war with Iran stokes supply concerns.
Disruptions to Middle Eastern oil exports through the Strait of Hormuz have caused a surge in fuel prices across the globe that is threatening to pinch consumers’ wallets and derail global economic activity. That could pose the biggest risk for U.S. President Donald Trump and his Republican Party in the Midterm elections in November, especially as a major driver of Trump’s re-election in 2024 was his vow to lower energy costs.
“Geopolitical shockwaves don’t take months to hit your wallet. They take days,” said William Stern, chief executive officer at U.S.-based small business lender Cardiff. “You feel the exact squeeze the second you fill up your car just to take the kids to practice.”
U.S. average retail gasoline prices have jumped nearly 60 cents since Trump’s decision to join Israel in attacking Iran on February 28 and stood at $3.58 a gallon on Wednesday. Even more increases are likely to follow in the days ahead as more ships were hit in the Strait of Hormuz on Wednesday and as the United States undergoes a transition to summer-grade gasoline sales, which burns cleaner but is costlier to produce.
Spot and wholesale gasoline prices were registering double-digit increases on Wednesday, said Denton Cinquegrana, chief oil analyst at Oil Price Information Service.
Wholesale price changes are typically reflected at the pumps the next day.
Crude oil prices, the biggest component in fuel costs, were also on the rise on Wednesday despite a proposal by the Paris-based International Energy Agency to release a record 400 million barrels of oil from strategic stockpiles.
The IEA’s announcement on the release raised more questions than answers as the group did not announce who would release how much oil and when, Cinquegrana said.
(Reporting by Shariq Khan in New York, Editing by Nick Zieminski)