The national average for gasoline prices in the United States rose above $4 per gallon on Monday, July 20, for the first time in over a month. This increase is attributed to renewed fighting between the U.S. and Iran, which has disrupted the flow of oil through the critical Strait of Hormuz and led to a surge in crude oil prices. The benchmark Brent Crude futures index briefly hit $90 per barrel on Monday. According to AAA, the national average gas price reached just over $4 per gallon, an increase from $3.87 per gallon the previous week. Diesel prices also climbed, reaching $5.10 per gallon from $4.87 last week.
This marks a reversal of a recent price slide that followed an interim peace deal between the two countries. While current prices are not as high as the peak seen in May, the ongoing conflict is creating significant market instability. Analysts like Patrick De Haan of GasBuddy previously predicted that the national average could reach $4 per gallon within 7-10 days, and the diesel average could hit $5 per gallon by the end of the week. The number of tankers transiting the Strait of Hormuz has fallen to a two-month low.
Contributing factors to the elevated prices include tight fuel supplies, disruptions to Russian refinery capacity due to Ukrainian drone attacks, and U.S. refineries prioritizing the production of jet fuel and diesel over gasoline. Despite lower crude oil futures during a brief ceasefire, gasoline prices remained stubbornly high, only briefly dipping below $3.80 in early July before rebounding. The current situation, occurring during the peak summer driving season, is raising concerns about potential re-inflation, which could pose a political challenge ahead of the fall midterm elections for President Donald Trump’s Republican Party. Some states, including Michigan, Maine, and Pennsylvania, have already seen prices climb back above $4.
