Gas prices pass $3.50 to highest level since mid 2024 amid U.S.-Iran war

Drivers are seeing the highest gas prices in more than a year and a half as the U.S.-Iran war disrupts the global oil trade.

The average price per gallon of unleaded gas in the U.S. climbed to about $3.54 per gallon on Tuesday, according to AAA. That’s the highest level seen since mid 2024 and marks a 21% increase from a month ago.

Gas prices began surging last week after the U.S.-Israeli strike on Iran and the ensuing conflict crippled the key Strait of Hormuz passageway, leading to the biggest oil supply disruption in history. Gas prices last week saw their largest three-day jump since Hurricane Katrina in 2005, according to an analysis from Bespoke Investment Group.

Before this month’s surge, the national average gas price had fallen to lows going back to 2021, according to AAA. Prices are still well off records seen in the aftermath of the Russian invasion of Ukraine in 2022, data shows.

President Donald Trump said Monday that he expects the war to end “very soon,” offering hope for consumers that their pain at the pump could ease in the near future. Defense Secretary Pete Hegseth said Tuesday would be the “most intense day of strikes” in Iran.

U.S. crude oil prices have whipsawed, last hovering around $84 per barrel after surpassing the closely watched $100 level earlier this week. Amin Nasser, chief executive of Saudi Arabian oil giant Aramco, said Tuesday that the war could have “catastrophic consequences” for the global oil market.

“While ​we have faced disruptions in the past, this one by far is the biggest crisis the region’s oil and gas industry has faced,” Nasser said.

The rise in gas threatens to undermine Trump’s focus on lowering the cost of living that was a pillar of his reelection campaign. Affordability remains a top political issue heading into the U.S. midterm elections this November that will determine whether Trump’s Republican party retains control of Congress.

Trump said at the World Economic Forum in Davos, Switzerland, earlier this year that there was “virtually no inflation” in the U.S. He pointed to sliding energy costs as an example of how the U.S. “defeated” inflation.

“Grocery prices, energy prices, airfares, mortgage rates, rent and car payments are all coming down, and they’re coming down fast,” Trump said at the January forum, during which gas prices sat near multiyear lows. “We’ve done a hell of a job in 12 months.”

Regardless of the war, gas prices tend to rise around this time of year as the spring break season kicks off, according to AAA spokesperson Aixa Diaz. Consumers should expect summer-blend gasoline to enter the market later in the spring, which is more expense than the winter blend currently sold.

“Those factors combined with elevated crude oil prices lead to higher pump prices,” Diaz told CNBC. “No one knows how much higher gas prices will go. Oil is a volatile global commodity.”

What consumers pay going forward depends in part on the length of the disruption to the market, according to Raymond James analyst Bobby Griffin.

If crude oil prices continue to rise, he said retailers will need to “chase” higher price tags to mitigate margin pressure. If crude stabilized at current levels, Griffin said oil sellers would have their margins squeezed for a few weeks.

Even if crude declines, buyers may not see an instant drop to prices, the analyst said, as retailers do not tend to immediately pass down cost savings to drivers.

— CNBC’s Spencer Kimball and Dan Mangan contributed to this report.

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