Gas prices surge as oil spikes amid Iran war. Here’s how much Americans are paying.

Gasoline prices in the United States are on the rise, driven by the recent U.S.-Israeli conflict with Iran which temporarily pushed oil prices above $100 per barrel, the highest since 2022. As a result, the average national cost of gas has reached $3.48 per gallon, marking a 48-cent increase since last week and a 58-cent increase from a month ago, according to data from AAA. Despite the spike, these prices are still lower compared to the peak of $5.02 per gallon during the pandemic.

California currently has the highest gas prices in the country, with drivers paying an average of $5.20 per gallon, followed by Washington state at $4.63 per gallon. On the other hand, Kansas boasts the lowest average price at $2.92 for a gallon of regular gas.

Both the U.S. benchmark WTI and the international benchmark Brent crude saw a significant jump to nearly $120 a barrel early Monday. However, WTI later settled at $94.77 and Brent crude at $98.96, with both prices dropping in the afternoon to below $85 and $95, respectively.

The surge in diesel prices has also been substantial, with the cost rising by nearly 89 cents over the last week to $4.66 per gallon. This increase in fuel prices can be attributed to the disruption in oil flow through the crucial Strait of Hormuz, connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea.

President Trump has expressed confidence in the U.S. capabilities to address the situation in the strait and has issued warnings to Iran regarding any attempts to block the waterway. He also hinted at a potential end to the conflict, stating that the U.S. is “very far ahead of schedule” in the war.

While some experts predict that gas prices could remain elevated until the fall due to higher seasonal demand this summer, others believe that the impact may not be as severe as initially feared. JPMorgan’s David Kelly suggests that average gas prices could reach $4 in the coming weeks but may stabilize around that level. Similarly, GasBuddy’s Patrick De Haan predicts gas prices to range between $3.50 and $3.65 per gallon before settling.

The ongoing turmoil in the Middle East, particularly in the Strait of Hormuz, is expected to keep crude oil prices elevated, potentially exceeding $120 per barrel until security in the region improves and tanker traffic resumes. To mitigate oil supply pressures, the U.S. International Development Finance Corporation has announced plans to insure ships sailing through the Persian Gulf.

As gas prices continue to rise, lower-income households are likely to be disproportionately affected, with a larger portion of their incomes allocated to essentials like gasoline. This could lead to reduced savings, increased consumer loans, and higher delinquency rates among vulnerable populations. However, higher-income Americans are expected to sustain consumer spending, mitigating the economic impact of the conflict.

In conclusion, while the war with Iran has led to a surge in gas prices, experts remain cautiously optimistic about the long-term implications. The U.S. government’s measures to stabilize energy markets and ensure the flow of oil are crucial in managing the situation and preventing further escalation.