Gasoline prices across the United States have climbed to $4.23 per gallon, the highest level since 2022, as geopolitical tensions in the Middle East push crude oil costs sharply higher. The benchmark Brent crude price now sits at $114.60 a barrel, up nearly 25 percent from its mid-April low, according to AAA data. A year ago, the national average was just $3.16 per gallon.
The price surge reflects mounting concerns over access to the Strait of Hormuz, a critical waterway through which roughly 20 percent of the world's oil passes. Recent shipping data shows vessel transits have plummeted to their lowest levels since conflict began in the region. During the week of April 20 to 26, only 35 ships passed through compared to 78 the previous week. Before the crisis, approximately 130 vessels transited daily.
Donald Trump has instructed his team to prepare for a prolonged blockade designed to squeeze Iran's economy by restricting its oil exports, according to reporting from the Wall Street Journal. The strategy represents what officials view as a middle ground between escalating military action and withdrawing from negotiations over a nuclear agreement.
On social media Tuesday, Trump claimed Iran is in a "State of Collapse" and suggested the country wants the strait reopened to stabilize its leadership situation. His Wednesday post took a more confrontational tone, stating that Iran needs to "get smart soon" about reaching a nonnuclear deal.
The climb in crude prices is amplifying the seasonal increases that typically occur this time of year. Refineries are performing scheduled maintenance while the spring-summer driving season approaches, both factors that historically push pump prices higher.
Higher oil costs are reverberating through the broader economy. Airlines have been hit especially hard, with fuel expenses jumping more than 70 percent since the conflict began. Some carriers are raising fares, trimming routes, and imposing new fees to offset soaring aviation fuel costs. In Europe, jet fuel prices have surged nearly 84 percent since late February. Willie Walsh, chief of the International Air Transport Association, warned of potential fuel supply rationing in Asia and Europe, though he noted underlying travel demand remains solid.
Consumer sentiment offers a mixed picture. A Conference Board survey released Tuesday showed U.S. consumer confidence unexpectedly ticked higher in April, reaching a four-month high. However, the same survey found households planning fewer vacations and driving trips, with the share intending to drive to holiday destinations hitting its lowest point since April 2020.
Bank of America analysts cautioned that if elevated gas and oil prices spread into groceries and utilities, the economic impact could become severe. So far, there is limited evidence of such spillover occurring.
The oil market shifted further Wednesday when the United Arab Emirates announced its departure from OPEC, marking a significant win for Trump, who has repeatedly criticized the cartel for manipulating prices to inflate costs globally.
Author James Rodriguez: "The Hormuz bottleneck is the real story here, not just higher pump prices. If shipping continues to crater, we could see genuine supply constraints that push crude even higher."
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