For the first time since August 2022, the average price for a gallon of gas in the United States has topped $4, according to AAA.
The surge comes as the global oil supply has been disrupted by the United States and Israel’s war with Iran, which led Iran to close the Strait of Hormuz — a passageway that handles about 20% of the world’s oil shipments.
The reduced supply has pushed Brent crude oil prices up nearly 45% in the past month.
RELATED STORY | Wall Street has its worst day since the war with Iran started and crude oil prices rise
Since the start of the war, gas prices have risen by about $1.20 per gallon.
The United States is not alone in experiencing the increase. Canada has also seen gas prices jump by more than 35% since the start of the conflict, according to the Canadian Automobile Association (CAA).
Members of the Federal Reserve Board have expressed concern that rising energy prices could affect inflation more broadly. The Federal Reserve sets interest rates, and inflation is a key factor in those decisions.
“If the conflict were to end soon, it is possible its effects on inflation and economic activity could be limited,” Federal Reserve Governor Michael Barr said. “But if it continues for some time, the spike in energy prices and other commodities could have broader implications for both prices and economic activity. We have had five years now of inflation at elevated levels, and near-term inflation expectations have risen again, so I am particularly concerned that yet another price shock could increase longer-term inflation expectations.”
The Trump administration has offered mixed signals on the future of the war. Officials say one of the administration’s main objectives — changing the regime in Iran — has been achieved, even though Iran is now led by Mojtaba Khamenei, the son of former Supreme Leader Ali Khamenei. However, the administration has also deployed troops to the region, suggesting that ground forces may be used to reopen the Strait of Hormuz.
RELATED STORY | Trump issues new threat to Iran's desalination plants if a ceasefire isn't reached 'shortly'
On Monday, the administration said talks with Iran are “going well.”
“It’s no surprise that we are seeing the remaining elements of the regime become increasingly eager to end the destruction and come to the negotiating table while they still can,” White House press secretary Karoline Leavitt said.
