Whether they’re driving, flying or just trying to heat their homes, consumers worldwide are fast feeling the effects of the widening Iran war.
Gasoline, diesel and jet fuel prices have jumped, as the conflict between the US, Israel and Iran chokes off oil shipments through the Strait of Hormuz.
And as the war threatens to drag on — with President Donald Trump demanding Iran’s total surrender — analysts say prices could climb far higher, fueling inflation.
“It’s too much,” said Uber driver Ahmed Abdelmagid, as he filled his SUV at a New York City gas station. Overnight, the station’s cash price for a gallon of regular had jumped 30 cents, to $3.29 (R55), according to data from GasBuddy.
“Especially for New York, everything is too expensive,” he said.
US gasoline prices will likely reach an average of $3.50 (R59) to $3.65 (R62) a gallon by the middle of the week, according to Patrick De Haan, GasBuddy’s head of petroleum analysis.
But $4 (R67) a gallon, which looked unlikely at the outset of the conflict, no longer seems outlandish, he said.
“I still have some level of confidence that the ‘drill baby drill, $1.85 (R31) a gallon in Iowa’ president is going to step in before we get to $4,” De Haan said. “But now I’m losing faith.”
Despite surging production in the US during the last decade, the world remains heavily reliant on Middle Eastern oil, much of which flows through the narrow strait that’s now effectively closed.
The war has not only threatened supplies — it’s driving up insurance costs for tankers, raising the cost of delivering crude and fuels even when cargoes can be sourced.
“The impact on the energy markets is likely to be way bigger than when Russia invaded Ukraine in 2022,” said Jeff Currie, chief strategy officer of energy pathways at Carlyle Group Inc.
The shock in refined product supplies has also begun upending typical trade routes, with the US exporting gasoline to Australia for the first time since 2023.
Not every country and region will feel the effects of the shock equally.
In Asia, which imports much of its oil from the Persian Gulf, suppliers of everything from shipping fuel to cooking gas are beginning to cut back on sales in order to manage shrinking stockpiles.
The anxiety is stoked by a lack of sizable reserves for most fuels.
“Downstream problems are cascading across Asia, and that’s leading to hoarding of inventories, which is amplifying the shortages,” Currie said. “Prices are finally starting to converge with reality.”
The US has its own ample supplies of crude oil and consumer fuels. But wholesale prices are still linked to the global market.
And because taxes in the US account for less of the final retail price of gasoline than they do elsewhere, any jump in oil prices is quickly visible at the pump.
The American Automobile Association Inc. said the national average for regular gasoline rose Saturday to $3.41 (R57) a gallon, the highest level ever under President Trump.
That’s up from $2.98 (R50) a week earlier. Should prices continue to climb, they could pose a dire political problem for Trump’s Republican allies, as they fight to keep control of Congress in this fall’s midterm elections.
Gas stations are scrambling to keep up with the ever-changing situation, according to Eric Blomgren, executive director at the New Jersey Energy Marketers Group.
Some are cutting their profit margins on prices as customers grow increasingly cost-sensitive.
“The way it keeps going up every day, if you can fill up now, you probably should as a consumer,” Blomgren said.
Europe’s retail increases have been more muted — so far at least — as higher fuel taxes cushion price swings.
Still, diesel and jet fuel markets have tightened, as traders brace for disrupted Middle Eastern supplies and longer, more expensive voyages — including detours around Africa.
The German government is monitoring whether action may be required to contain fuel-price hikes, and analysts see other countries considering interventions.
Jet fuel prices, meanwhile, have surged in the past week to about $3.89 (R66) a gallon in the New York area after hovering near $2 (R33) for most of 2025.
The spike comes as the war raises costs for carriers already grappling with uncertain travel demand.
Airlines now have to balance raising fares to offset higher fuel expenses with the risk of pushing away price-sensitive travellers.
And it could get worse. Globally, refiners already produce nearly as much jet fuel as they can, according to Susan Bell, senior vice president for downstream research at Rystad Energy.
Any supplies kept off the market by the war can’t easily be replaced by refiners elsewhere.
“The prices could go to infinity, and it wouldn’t matter,” Bell said.
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