Gasoline prices in the United States have climbed sharply since the start of the Iran war, with the average cost of regular fuel now about 50% higher than before the conflict began.
The national average price for regular gasoline rose 31 cents in the past week to $4.48 per gallon on Tuesday, according to AAA data. The increase extends a broader upward trend that has unfolded over the past two months as global crude oil supplies tightened and supply routes through the Persian Gulf came under sustained disruption.
A key pressure point has been the Strait of Hormuz, through which roughly one-fifth of global crude oil normally passes. Shipping through the narrow waterway has been heavily restricted during the conflict, leaving tankers delayed or unable to move cargo efficiently. The International Energy Agency described the situation as one of the most severe disruptions to global oil markets in recent history.
Fuel pricing in the U.S. is closely tied to crude oil, which accounts for just over half of the cost of gasoline. The Energy Information Administration estimates that taxes contribute about 17% of the pump price, while refining and distribution costs make up the remainder. In states with higher fuel taxes and stricter refining standards, prices often exceed the national average.
IBT reporting highlighted broader ripple effects across the energy sector, including reduced global demand projections and shifting production strategies among major suppliers. One analysis noted that oil demand has fallen at levels not seen outside the pandemic period, while OPEC has adjusted output in response to uneven supply conditions and ongoing shipping constraints. Another IBT report described market volatility as refinery output and trade flows continue to adjust to disrupted Gulf logistics.
At the consumer level, higher fuel costs are feeding into broader economic pressure. A report from CNBC found that many American households have reduced spending in response to sustained gasoline price increases, with limited expectation of near-term relief. Meanwhile, the Los Angeles Times reported that inflation linked to energy costs has risen even as consumer spending patterns remain relatively steady in some categories, reflecting uneven adjustment to higher prices.
However, oil prices are plunging on Wednesday following reports that the U.S. and Iran are making progress towards a memorandum of understanding to end the war.
Both Brent crude and West Texas Intermediate dropped, with the former plunging by over 6.5% and the latter by more than 7%. The international benchmark stood below $103 at 8:52 a.m. ET, while the U.S.'s clocked in at $94.83.
The development follows an Axios report claiming that Washington and Tehran are getting close to a one-page memorandum of understanding with 14 points to end the war and usher detailed nuclear negotiations.
