Iran conflict drives sharp rise in US gas prices

Gasoline prices across the United States have surged in recent days, climbing another five cents per gallon in the latest reading from American Automobile Association (AAA) and pushing the national average to $3.25 per gallon, the highest level recorded in the past 11 months.

The sharp increase follows escalating tensions surrounding the war in Iran and the effective closure of the strategically vital Strait of Hormuz, a key maritime passage through which roughly 20% of the world’s oil supply is transported, CNN reports.

According to reports, fuel prices have also been driven upward after Iran launched retaliatory strikes targeting oil facilities in neighboring energy-producing states, including the United Arab Emirates, Qatar, Kuwait and Saudi Arabia—the world’s largest oil exporter.

Much of the surge in gasoline prices has occurred within the past three days. Although March 5 increase of five cents per gallon was notable, it followed even steeper daily spikes earlier in the week. Prices rose by nine cents on March 4 and 11 cents on March 3, marking the largest single-day jump since the aftermath of Hurricane Katrina in 2005.

Overall, gasoline prices have climbed 26 cents per gallon since February 27, representing the most significant three-day increase since March 2022, shortly after sanctions were imposed on Russia following its invasion of Ukraine.

Meanwhile, diesel prices are rising even more sharply. The national average price of diesel increased 12.8 cents to $4.17 per gallon in March 4 report, bringing the total rise to 40 cents over the past three days.

Although relatively few American drivers rely on diesel-powered passenger vehicles, the spike is expected to have broader economic consequences. Most heavy trucks operate on diesel fuel, and many trucking companies apply fuel surcharges to offset rising costs. Similar surcharges are also being introduced for ocean freight shipments, increasing the cost of transporting goods and potentially pushing consumer prices higher in the coming weeks.

Elevated diesel prices could also affect the agricultural sector. Farmers rely heavily on diesel-powered machinery, and the surge comes as they prepare for the spring planting season. In addition, households in the northeastern United States that use heating oil—essentially the same product as diesel—may face higher energy costs.

Market indicators suggest that further increases could be on the horizon. In early trading on March 5, wholesale gasoline prices and the major global oil benchmarks—West Texas Intermediate and Brent Crude—were both trending slightly higher, signaling continued pressure on fuel prices.

By Vafa Guliyeva