War With Iran Drives Up Gas and Heating Oil Costs for Americans

American drivers hit $4 at the pump on March 31 for the first time since 2022, the clearest sign yet that the ongoing war with Iran is reshaping the cost of daily life in the United States. According to AAA, the national average crossed that threshold as oil markets reacted to the continued disruption of shipping through the Strait of Hormuz, the critical waterway through which roughly one-fifth of the world's crude oil normally flows.

The price spike has been sharp and swift. When the U.S. and Israel attacked Iran on February 28, a gallon of unleaded gasoline averaged $2.98 nationally. In just the first week of the war, the average jumped 48 cents per gallon. By late March, drivers were paying roughly 33% more than they had a month earlier. David Doyle, head of economics at Macquarie Group, calculated that the average monthly gas price in March is on pace for the largest single-month increase since October 1990.

The pain extends well beyond the gas pump. Residential heating oil prices surged above $5 a gallon, their highest level since November 2022, according to Bloomberg. Diesel crossed $5 per gallon on March 17 and now sits more than 40% above pre-war levels, a surge with broad consequences for trucking, freight, and food supply chains. Patrick Penfield, a professor of supply chain practice at Syracuse University, noted that fuel accounts for 50 to 60 percent of total operating costs for ocean shipping.

Crude oil markets have amplified every development in the conflict. Brent crude, the global benchmark, rose to $107.92 a barrel on March 29 after Iran's parliament speaker warned that the country's forces were "waiting" for American ground troops. Goldman Sachs upgraded its near-term oil price forecast in a March 22 note, estimating Brent would average $110 per barrel through April. Analysts speaking to Reuters warned that if Kharg Island, Iran's primary oil export hub, were seriously damaged, Brent could climb to $120 per barrel, with some projections reaching $200.

The Energy Information Administration's March 2026 short-term outlook projected Brent would remain above $95 per barrel for at least two months, before retreating below $80 in the third quarter and ending the year around $70. The EIA estimated that crude oil prices are pushing retail gasoline roughly 60 cents above what they otherwise would have been in March and approximately 70 cents higher in the second quarter.

The financial toll on households is adding up fast. Sen. Edward Markey put the figure at $500 in additional gasoline costs per driver for 2026. A separate March study was more alarming, projecting that average households could pay as much as $857 more than normal for gas through the end of the year. Nearly five million American households that rely on residential heating oil, concentrated heavily in the Northeast, are bearing the steepest burden. Richard DeRoeck, a homeowner in Woburn, Massachusetts, received a $900 heating oil bill for a single month, more than double his typical $400 charge.

The war is also straining drivers, postal workers, farmers, and food delivery operators whose livelihoods depend on predictable fuel costs. Despite the United States being the world's leading oil producer, prices are set on the global market, leaving American consumers exposed to disruptions half a world away. Goldman Sachs analysts noted in their March 22 report that the U.S. could end military action at any point, which would likely reduce the risk premium embedded in crude and refined product prices. Until that happens, the Strait of Hormuz remains largely closed, and the costs keep climbing.