U.S. Average Gasoline Price Rises to $4.54 per Gallon

U.S. 54 on Wednesday, AAA data showed. The national average stands 52 percent higher than before the war with Iran began.

Iran's effective closure of the Strait of Hormuz, through which a fifth of the world's crude oil normally passes, has kept supplies constrained and driven the increase. Oil prices reached $112 a barrel in early April after the closure triggered the largest supply disruption in the history of oil markets, the International Energy Agency said.

U.S. And Iran appeared to move closer to an initial agreement to end the war. , oil prices represented about 51 percent of the price of a gallon of gasoline in 2025, according to the Energy Information Administration. Gasoline prices fell daily for almost two weeks in mid-April amid signs the conflict could be winding down.

After the announcement of the initial ceasefire, crude prices came down, gasoline spot prices followed, and retailers lowered prices, Rob Smith, director of global fuel retail at S&P Global Energy, said. Prices reversed course and began increasing again as hostilities over the strait kept oil supplies constrained.

“There’s a fundamental shortfall that will exist globally or fundamental struggle to meet that demand that will drive up price,” Smith said.

“No matter what a government says or what any market person thinks, there is a true kind of upward pressure that’s being exerted on prices every day the Strait of Hormuz is constrained. Federal and state taxes contributed about 17 percent of the price of gasoline, refining costs and profits contributed 14 percent, and distribution and marketing contributed 17 percent, the EIA said.

In some states such as California, higher taxes and refining costs push the price of gasoline well above the national average.

U.S. blocked Iranian ports to stop the country from exporting oil. “Iran had been moving an unusually high amount of oil to global markets, so that was helping moderate prices,” Jim Krane, energy research fellow at Rice University’s Baker Institute, said.

“The Trump administration decides they’re going to punish Iran, and try to put more pressure on Iran by blocking their exports, so of course that does put pressure on Iran, but also puts pressure on global oil prices and forces them up. The price of gasoline jumped 48 cents in a week in early March at the beginning of the Iran war, AAA said.

The highest weekly jump was 60 cents in a week in March 2022 after Russia invaded Ukraine.

U.S. costs more now than it did in early May of 2022, when prices kept climbing through Memorial Day.

U.S. Benchmark oil, have matched up over the past few weeks. “Not much of a mystery here,” Kleinberg said. ” “The oil market is exquisitely sensitive to what’s coming out of the White House,” Kleinberg said.

Even if there was a true and lasting resolution of the conflict and both sides commit to keeping Hormuz open, it will still take months to get back to what it was pre-war, Smith said. “There will still be within the industry a risk premium associated with going through that region,” Smith said.