US Gas Prices Hit $4.18 per Gallon Amid Stalled Iran Talks and Rising Oil Costs

US gasoline prices climbed to a national average of $4.18 per gallon on April 28, marking the highest level since the start of the war with Iran in February. This increase follows a 7-cent overnight rise, adding to a $1.20 per gallon surge since February 28.

The price hike coincides with stalled negotiations between the US and Iran, prompting oil market volatility. President Trump released a statement on Iran as US oil prices rose above $100 per barrel. The administration rejected Iran's latest proposal to reopen the Strait of Hormuz in exchange for dropping the US blockade of Iranian ports and postponing nuclear discussions.

The White House stated it would adhere to its red lines in assessing the offer.

Oil prices rose by 1% in one report, with US crude at $97.50 per barrel and Brent crude at $109.50. However, other sources indicated Brent crude jumped more than 3% to over $110 per barrel, while West Texas Intermediate hovered just below $100. These discrepancies highlight varying market data points amid the ongoing conflict.

Iran's restriction of tanker traffic through the Strait of Hormuz has caused supply shocks, pushing crude prices from around $70 per barrel at the war's start. A two-week ceasefire agreed on April 8, later extended, briefly lowered prices, but faltering talks have reversed that trend.

President Trump canceled plans to send a negotiation team to Pakistan. Americans have spent an estimated $150 more on gas over the past two months compared to pre-war levels below $3 per gallon. By year's end, this could total $800 extra per person, offsetting increases in tax refunds from last year's legislation.

Economists predict gas prices will remain above $4 through summer, declining in fall, due to the 'rockets and feathers' principle where prices rise faster than they fall. Regional issues, such as refinery outages in Northwest Indiana and Illinois, may push prices higher in Michigan, Wisconsin, Illinois, and Indiana by 40 to 50 cents.

Higher diesel prices at $5.46 per gallon, up $1.70 since the war began, could increase costs for food and goods through elevated transportation expenses. Airfares and grocery prices may also rise as energy costs permeate the economy.

The oil price surge has impacted global earnings, with China's top refiner reporting a 28% profit increase to 17 billion yuan in the first quarter, aided by higher crude prices and stable domestic fuel sales. Throughput slipped 0.2% year over year amid Middle East supply disruptions.

Cryptocurrency markets reacted, with Bitcoin trading at $76,923 after a 2.4% drop, and other assets like ether and solana declining as Brent crude rallied for a seventh day. The war aims to curb Iran's nuclear ambitions and support for terror proxies, with initial strikes launched by the US and Israel.

A brief price drop occurred after an early April ceasefire, when averages hit $4.17 on April 9 before easing. Negotiations lost momentum recently, with no immediate resolution in sight.

Elevated gas prices threaten GDP growth, as consumer spending accounts for 70% of economic activity. While drivers have not yet cut back significantly due to daily routines, sustained high costs could reduce discretionary spending. The administration met with its national security team to discuss Iran's proposal but did not confirm consideration of it.

Gas prices jumped 1.6% in one day, the largest since strikes began in February.