The average price of gasoline at US pumps has surpassed $4 per gallon for the first time in nearly four years, as the ongoing conflict involving Iran drives fuel costs higher.
According to the AAA motoring organisation, the national average for a gallon of regular gas is now $4.02, over a dollar higher than when the war began. Diesel prices have also surged, rising about $1.70 on average.
The month-long effective closure of the Strait of Hormuz, a key global energy waterway, has slowed or halted oil production and transport across the Middle East, pushing crude oil prices sharply upward.
Before the conflict began on February 28, the US average for gasoline was $2.98 per gallon, while diesel averaged $3.76—now up to $5.45, a surge expected to contribute to rising food and transport costs.
AAA also noted that high spring break demand last week added pressure to pump prices. The current $4.02 national average is the highest since August 2022, though some states already have prices above $4 a gallon.
While still below the record highs of $5.01 for gas and $5.81 for diesel set in June 2022 after Russia’s invasion of Ukraine, the impact on household budgets could be more pronounced this time. Moody’s warned that with weaker job and wage growth, sustained high prices may reduce consumer spending.
“If the conflict is contained soon, the hit to confidence may be temporary,” Moody’s analysts said. “But a prolonged crisis could prompt more precautionary saving and further discretionary spending cuts.”
Rising wholesale energy costs are showing up at the pump worldwide. In the UK, petrol prices have increased 14% and diesel 27% since the conflict began. Some countries, including Sri Lanka and Bangladesh, have introduced fuel rationing, while Slovenia recently became the first EU country to do so.
Other nations are offering temporary relief measures. In Australia, fuel sales tax has been halved for three months, and two states are providing free public transport to reduce driving costs.