Iran war drives U.S. gas prices above $4, inflation climbs

Drivers are paying for the Iran war at the pump now. AAA’s national average gasoline price stood at $4.392 a gallon on Friday, after hitting $4.30 on Wednesday and $4.18 on April 28, the highest level since the conflict began. Americans were paying $1.20 more per gallon than they were on February 28, when the war started, and the jump has helped push inflation to its highest level in nearly two years.

The price surge has been fast enough to reshape household budgets in a matter of weeks. A two-week ceasefire announcement briefly pulled the national average down to $4.09 on April 16, after crude oil slipped below $100 a barrel, but the relief faded quickly. Since then, fuel prices have climbed again as traders and refiners have absorbed the next round of disruption tied to the conflict in the Middle East.

Crude oil remains the biggest force behind what consumers pay at the nozzle. AAA says about 47% of the price of a gallon of gasoline comes from crude, and the U.S. Energy Information Administration says oil, refining, distribution and taxes all feed into the final pump price. AAA also estimates that every $1 increase in crude oil can add about 2.4 to 2.5 cents to gasoline prices, a reminder of how quickly shocks in global energy markets reach American drivers.

That transmission mechanism is why the Strait of Hormuz matters so much. AAA and GasBuddy say price spikes in crude and any disruption to tanker traffic through the waterway can keep fuel prices elevated, with Patrick De Haan warning that wholesale increases are still working their way into retail prices and can hit inland states later than coastal markets. The pressure does not stop at the gas station. Higher fuel costs can bleed into freight rates, delivery costs and the summer travel budget just as families are planning road trips and vacations.

The latest levels also have a historical edge. The last time the national average was at or above $4 a gallon was in early August 2022, and that year briefly brought a one-week national record near $5 a gallon in June. With prices now back above $4 and the conflict still unresolved, motorists are once again facing a fuel market that can turn household spending into a direct casualty of foreign policy.