Gas prices pass $3.50 to highest level since mid 2024 amid U.S.-Iran war
A Citgo gas station is located in Boston, Massachusetts, USA, January 6, 2026.
Brian Snyder | Reuters
Motorists are seeing the highest gas prices in more than a year and a half as the US-Iran war disrupts global oil trade.
The average price per gallon of unleaded gasoline in the U.S. rose to about $3.54 on Tuesday. AAA. This is the highest level since mid-2024 and represents a 21% increase from a month ago.
Gas prices began to rise last week after the US-Israeli attack on Iran and subsequent conflicts paralyzed the key Strait of Hormuz chokepoint and led to the largest oil supply disruption in history. Gas prices last week saw their biggest three-day increase since Hurricane Katrina in 2005, according to analysis by Bespoke Investment Group.
Before this month’s increase, the national average gas price had fallen to the lowest levels dating back to 2021, according to AAA. Data shows prices are still well below records seen after Russia invaded Ukraine in 2022.
President Donald Trump said Monday he expects the war to end “very soon,” giving consumers hope that their woes at the pump may ease in the near future. Defense Secretary Pete Hegseth said Tuesday would be “the busiest day of attacks” in Iran.
US crude oil prices have fallen sharply and were last hovering around $84 a barrel after breaching the closely watched $100 level earlier this week. Amin Nasser, chief executive of Saudi Arabian oil giant Aramco, said on Tuesday that the war could lead to “catastrophic consequences” for the global oil market.
“While we have faced disruptions in the past, this is by far the biggest crisis facing the region’s oil and gas industry,” Nasser said.
affordable price
The increase in gas threatens to undermine Trump’s focus on lowering the cost of living, a mainstay of his reelection campaign. Affordability remains the top political issue that will determine whether Trump’s Republican party retains control of Congress ahead of the US midterm elections this November.
There is “almost no inflation” in the United States, Trump said at the World Economic Forum in Davos, Switzerland, earlier this year. He pointed to the decline in energy costs as an example of how the US is “beating” inflation.
“Grocery prices, energy prices, airline tickets, mortgage rates, rent and car payments are falling and falling fast,” Trump said at the forum in January, when gas prices were near multi-year lows. “We have done a great job in 12 months”
Regardless of the war, gas prices tend to rise this time of year with the start of the spring break season, according to AAA spokeswoman Aixa Diaz. Consumers should expect summer blend gasoline to hit the market later in the spring; this is more costly than the winter mix currently sold.
“These factors, combined with higher crude oil prices, lead to higher prices at the pump,” Diaz told CNBC. “Nobody knows how high gas prices will go. Oil is a volatile global commodity.”
What consumers will pay in the future depends in part on the duration of the market disruption, according to Raymond James analyst Bobby Griffin.
If crude oil prices continue to rise, retailers will need to “pursue” higher price tags to ease margin pressure, he said. If crude oil stabilizes at current levels, Griffin said oil dealers’ margins will be squeezed for several weeks.
Even if crude oil falls, buyers may not see a sudden drop in prices because retailers don’t tend to pass on cost savings to drivers immediately, the analyst said.
— CNBC’s Spencer Kimball and Dan Mangan contributed to this report.
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