Gas Prices Surge to 18-Month Peak Amid Iran Conflict and Oil Supply Crisis

Key Takeaways

• National fuel average reached $3.54 per gallon on March 10, marking the peak since mid-2024
• A 21% monthly increase translates to over 50 cents added since military operations started Feb. 28
• Critical shipping corridor through the Strait of Hormuz—responsible for 20% of worldwide oil transport—stays blocked
• Benchmark crude prices fluctuated dramatically from approaching $120 down to approximately $84–$85 per barrel
• Industry experts project fuel costs will remain elevated due to increasing seasonal consumption

American motorists are experiencing their steepest fuel expenses in more than a year and a half. AAA reported the nationwide average reached $3.54 per gallon on March 10, representing a 21% climb from 30 days earlier.

This sharp increase stems from the military engagement between the U.S. and Iran, which commenced February 28 following coordinated strikes by U.S. and Israeli forces. The hostilities have severely impacted operations through the Strait of Hormuz, a critical maritime passage handling approximately one-fifth of global petroleum shipments.

GasBuddy’s tracking indicates fuel averaged $2.98 per gallon on February 27, the day preceding the conflict. This translates to consumers spending over 50 cents more per gallon at current rates.

The consecutive three-day price acceleration witnessed last week represented the sharpest increase recorded since Hurricane Katrina struck in 2005, based on research from Bespoke Investment Group.

Benchmark oil prices have experienced dramatic swings. Brent crude climbed toward $120 per barrel Monday morning before retreating to the $85 range following President Trump’s statement suggesting the conflict might conclude “very soon.” West Texas Intermediate has climbed approximately 25% since late February.

Factors Keeping Fuel Costs Elevated

Despite crude oil’s recent decline, pump prices haven’t mirrored that movement—at least not immediately. Patrick De Haan, petroleum analyst at GasBuddy, anticipates prices will plateau in the $3.55 to $3.65 range over the coming 24 to 36 hours.

Two primary factors explain this price stickiness. Retailers typically delay passing reduced crude costs to consumers at the pump. Additionally, fuel demand climbs seasonally as spring vacation season arrives and milder temperatures encourage more driving.

Regulatory requirements also mandate stations transition to costlier summer-formula gasoline, distributed from June 1 through September 15. This seasonal blend generally increases consumer costs by roughly 15 cents per gallon.

According to De Haan, prices will maintain elevated levels while the Strait of Hormuz shipping channel remains restricted. Iranian officials threatened last week to attack oil tankers, and Bloomberg’s monitoring systems indicated the waterway stayed mostly closed through Tuesday.

Market Outlook and Projections

Raymond James analyst Bobby Griffin indicated that assuming crude prices stabilize, fuel retailers will experience compressed margins over several weeks before market conditions normalize.

Iran’s foreign minister announced Tuesday that the nation remains committed to continued military action and rejected diplomatic engagement with Washington.

The Strait of Hormuz continued operating under severe restrictions as of March 10, with limited movement consisting primarily of Iranian-affiliated vessels.

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