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U.S. motorists are once again paying an average of $4 per gallon for regular gasoline after renewed conflict involving Iran disrupted Middle East oil shipments and pushed crude prices higher. According to AAA, the national average rose 13 cents from a week earlier as tighter crude supplies, constrained refining capacity and strong summer demand combined to reverse recent declines at the pump.
The latest escalation has renewed concerns over shipping through the Strait of Hormuz, one of the world’s most important oil transit routes. Markets are also increasingly focused on threats to shipping through the Red Sea, which Saudi Arabia has relied on as an alternative export route, adding fresh uncertainty to global energy supplies.
Details
- Gas prices: AAA said the national average for regular gasoline reached $4 per gallon on Monday, up from $3.87 a week earlier after briefly falling below the $4 mark earlier this month.
- Supply risks: Renewed disruption around the Strait of Hormuz has slowed oil shipments, while growing concerns over threats to Red Sea shipping have increased fears that both major Middle East export routes could face sustained pressure.
- Oil markets: Brent crude briefly traded above $90 per barrel before easing into the high-$80 range, while U.S. benchmark West Texas Intermediate hovered around $82.
- Refining constraints: Tight fuel inventories, high refinery utilisation and strong summer travel demand have amplified the impact of rising crude prices on motorists.
- Regional differences: Fuel prices remain uneven across the country, averaging about $3.60 per gallon in many Southern states but around $5.50 in California.
What Else
- Inflation pressure: Higher fuel costs could feed into broader consumer prices if crude oil remains elevated in the coming weeks.
- Political impact: Rising gasoline prices could complicate the White House’s efforts to highlight easing inflation ahead of November’s U.S. midterm elections.
- Diplomatic efforts: While U.S. and Iranian officials have signalled they remain open to negotiations, markets continue to watch developments around the Strait of Hormuz and the Red Sea for signs that supply disruptions could either ease or worsen.
