New York — The price of a gallon of regular gasoline rose 31 cents in the past week, rising to an average of $4.48 a gallon on Tuesday, according to AAA, hitting drivers’ wallets after rising 50% since the war with Iran began.
The main reason drivers pay more at gas stations is the global energy crisis caused by the Iran war. The prices of crude oil, the main component of gasoline, have been rising for most of the past two months due to the closure of the Strait of Hormuz, the narrow passage in the Persian Gulf through which a fifth of the world’s crude oil usually passes, and oil tankers were stranded there unable to deliver crude oil.
Many drivers were optimistic in mid-April, amid signs that the conflict may be coming to an end, and gasoline prices fell daily for nearly two weeks.
“After the initial ceasefire was announced, there was a bit of optimism that this might actually be the beginning of the end of the conflict,” said Rob Smith, global retail fuels director at SS.&In global energy. “So crude oil prices fell correspondingly, spot prices for gasoline followed suit, and so on, and retailers cut prices as well.”
But as the war continued, gasoline prices reversed course and began to rise again.
“There will be a fundamental deficit globally or a fundamental struggle to meet that demand that will drive prices higher,” Smith said. “No matter what the government says or what anyone in the market thinks, there is a real kind of upward pressure being put on prices every day that the Strait of Hormuz is restricted. It continues to be severely restricted.”
Gas station owners set prices at the pump, but many factors go into what they decide to charge.
The main component of the cost of gasoline is the price of a barrel of crude oil. In the United States, oil prices represented about 51% of the price of a gallon of gasoline in 2025, according to the Energy Information Administration.
This means that when crude oil prices rise, gasoline prices generally follow. Low oil in the market means higher oil and gasoline prices. The virtual closure of the Strait of Hormuz led to the largest supply disruption in the history of oil markets, according to the International Energy Agency, pushing oil prices to $112 a barrel in early April.
Bob Kleinberg, a senior research associate at Columbia University’s Center on Global Energy Policy, compared the average price of a gallon of gasoline in the United States with the price of a barrel of West Texas Intermediate crude, the U.S. benchmark oil, over the past few weeks, and said the price changes are generally identical.
“There’s not a lot of mystery here,” Kleinberg said. “It’s not exactly proportional, but the shape of the curves follows the same pattern, and in fact with very little delay.”
Federal and state taxes contributed about 17% of the oil price, refining costs and profits contributed 14%, and distribution and marketing contributed 17%, the EIA said. In some states, such as California, high taxes and refining costs are pushing the price of gasoline well above the national average.
One event that could have changed the course of gasoline prices occurred in April, when the United States closed Iranian ports to prevent the country from exporting oil.
“Iran was transporting an unusually large amount of oil to global markets, so that was helping to cool prices,” said Jim Crane, an energy research fellow at the Baker Institute at Rice University. “The Trump administration decided they were going to punish Iran, and they are trying to put more pressure on Iran by blocking their exports, and that of course puts pressure on Iran, but it also puts pressure on global oil prices and forces them higher. That’s probably been a big factor.”
What refiners and traders are willing to pay for oil fluctuates wildly after news spreads about attacks on ships in the Persian Gulf or diplomatic talks stall. “The oil market is very sensitive to what comes out of the White House,” Kleinberg said.
Back in early March, at the start of the Iran war, the price of gasoline jumped 48 cents in a week. AAA said the highest weekly jump was in March 2022, when the price jumped 60 cents in a week after Russia invaded Ukraine.
No one can predict how high gasoline prices will be. AAA said a regular gallon in the U.S. now costs more than it did in early May of 2022, and at that time, the price continued to rise through Memorial Day.
The longer the flow of oil through the Strait of Hormuz is restricted, the higher prices will go, and the longer it will take to return to normal, Smith said.
“Even if there is a real and lasting solution to the conflict, and both sides agree to play nice and truly commit to keeping Hormuz open, it will take months to get back to what it was like before the war, if not even longer,” Smith said. “There will still be a risk premium associated with passing through that area within the industry. It is not that it has ever been a completely safe journey, but the last few months have shown that it will be difficult to convince shippers and insurers that the level of risk will be similar to what it was in February. It will be a long time before anyone is convinced of that.”