US gasoline prices have surged past the $4 per gallon mark for the first time since August 2022, reaching a national average of $4.018 per gallon according to data from GasBuddy. This represents the largest monthly gain on record. The price spike is directly tied to the ongoing US-Iran war, now in its fifth week, which has severely disrupted global oil supply chains.
Crude oil benchmarks have skyrocketed approximately 50% over the past month. Brent crude, the global benchmark, traded near $112.87 a barrel on Tuesday, while West Texas Intermediate (WTI) sat at $102.49. Both are on track for a 50-54% gain in March, one of the biggest monthly rises ever recorded. Diesel prices have hit even harder, with the national average reaching $5.45 per gallon—also a record monthly gain.
The conflict's epicenter is the Strait of Hormuz, a critical chokepoint that handled roughly 20% of global oil and natural gas before the war. A Kuwaiti oil tanker was set ablaze near Dubai in an attack blamed on Iran, further exacerbating supply fears. Despite reports that President Trump is willing to wind down military operations even if the Strait remains closed, analysts warn prices may not retreat quickly. Iran's parliament has approved a plan to collect tolls on vessels traveling through the waterway, indicating prolonged disruption.
Financial institutions have dramatically revised their forecasts. Goldman Sachs raised its April Brent forecast from $85 to $115, citing a longer disruption supporting the risk premium. Senior Saudi officials have modeled Brent at $180 if the war runs through April, while analysts at Macquarie have warned prices could cross $200 if the conflict continues through June.
The Trump administration's emergency measures—including waivers on ethanol restrictions and Jones Act shipping requirements—have failed to make a visible dent in pump prices. The inflationary impact is already rippling globally, particularly in Asia. Bangladesh has shut universities, while Pakistan and the Philippines have introduced shortened workweeks to manage soaring energy demand.
Additional geopolitical tensions are keeping markets nervous. Yemen's Houthi group entered the conflict over the weekend, attacking Israel and raising fears of a second front. The US has deployed thousands of troops to the region, with Trump repeating threats to target Iran's infrastructure if the Strait is not reopened by April 6.
