American drivers are facing a grim milestone at the pump for the first time since the global energy shocks of 2022. On Tuesday, national petrol prices officially went over $4.00 per gallon. This was because of the rising violence in the Middle East and the fact that all shipping traffic in the Strait of Hormuz had come to a complete stop.
AAA says that the national average reached $4.02, which is a shocking 34.7% rise in just 30 days. To put this in context, this monthly rise is more severe than the price spikes seen during Hurricane Katrina in 2005 or the start of the Russia-Ukraine war.
1. The $100 Barrel Returns
The price of crude oil is the main reason for this “rocket-ship” rise.
The March Surge: In March, the price of U.S. crude oil rose by more than 50%, settling above $100 per barrel.
The “Trump Factor”: After President Trump’s recent comments, the market became much more volatile. Analysts say this made people more worried about a long-term military conflict with Iran. WTI (West Texas Intermediate) is currently around $102 and doesn’t seem to be going down.
2. The “Hormuz Choke”: A World Crisis
The U.S. is the biggest oil producer in the world, but fuel prices are set by a global market that is currently in a panic.
The Blockade: The war has effectively neutralised the Strait of Hormuz, which is a key route for about 20% of the world’s oil supply.
The Uncertainty: Since the “lock” on the Strait doesn’t seem to be opening any time soon, traders are pricing in a long-term supply shortage, which keeps retail prices high even on days when oil trading is slow.
3. “Up Like a Rocket, Down Like a Feather”
Energy experts say that even if a ceasefire were signed tomorrow, it wouldn’t help American consumers right away. “Gas prices go up like a rocket and come down like a feather,” says independent analyst Tom Kloza.
Before cheaper oil can get to the consumer, the expensive “war-time” crude that is already in the system needs to be refined and sold. This delay means that $5.00 per gallon is now a real, if scary, possibility for the summer driving season.
