What's Happening
As of July 31, 2026, active military hostilities between the United States and Iran have injected a severe risk premium into global oil markets, sending crude prices sharply higher and dragging gasoline prices up with them. The conflict — which PBS News has characterized as driving energy prices to elevated levels while simultaneously delivering windfall profits to major oil companies — represents one of the most significant geopolitical shocks to hit energy markets since Russia's 2022 invasion of Ukraine.
West Texas Intermediate (WTI) crude, the U.S. benchmark, has surged in response to the fighting, with traders pricing in the possibility of supply disruptions across one of the world's most critical energy chokepoints: the Strait of Hormuz. Roughly 20% of all globally traded oil — approximately 17 to 21 million barrels per day — transits this narrow waterway between Iran and Oman. Any sustained Iranian threat to close or mine the strait would represent a catastrophic supply shock to world markets.
The market reaction has been swift and severe. WTI crude, which was trading in the mid-$70s per barrel earlier this summer, has climbed toward the $90-to-$95 per barrel range in recent sessions, according to futures market data — a move of roughly 20% or more in a compressed timeframe. Brent crude, the international benchmark, has tracked similarly higher. That kind of crude price spike doesn't stay contained in the trading pits for long. It flows directly into the cost of refining gasoline, diesel, and jet fuel, and within days to weeks, it shows up on the price boards at every gas station in America.
Major integrated oil companies — including ExxonMobil, Chevron, and ConocoPhillips — are reporting or are expected to report sharply higher quarterly profits as their upstream production assets suddenly become far more valuable. This dynamic, where corporate earnings soar while consumers pay more to fill their tanks, has drawn sharp political attention in Washington.
Data Snapshot
According to EIA weekly retail gasoline price data, the national average price per gallon for regular unleaded had already been trending upward heading into the conflict escalation. With WTI crude now estimated near $90–$95 per barrel — up from roughly $72–$75 per barrel in early summer 2026 — the crude cost embedded in each gallon of gasoline has risen by approximately 43 to 54 cents per gallon on a raw input basis, before refining margins and taxes are factored in.
AAA reports that the national average gas price today is tracking meaningfully above the year-ago level, with the pump price per gallon for regular gasoline potentially approaching or exceeding $3.80–$4.00 nationally depending on the pace of crude's move. EIA data shows U.S. commercial crude oil inventories have been drawing down in recent weeks, tightening the domestic supply cushion. A draw of 3–5 million barrels in a single week — not unusual during summer driving season — leaves less buffer against an external supply shock. OPEC+ spare capacity, estimated by the IEA at roughly 5–6 million barrels per day heading into mid-2026, may not be deployable quickly enough to offset a Hormuz disruption.
Why It Matters at the Pump
For everyday American drivers, the math is straightforward and painful. As a rough rule of thumb, every $10-per-barrel increase in crude oil prices translates to approximately 24 to 25 cents per gallon at the pump, though the pass-through isn't always immediate or uniform. If WTI has moved $15 to $20 per barrel higher since the conflict began, drivers could be looking at an additional 36 to 50 cents per gallon baked into future retail prices — on top of whatever they were already paying.
The national average gas price today is the headline number, but regional variation is where drivers really feel the difference. California and the West Coast are almost always the first and hardest hit. California's unique blend requirements, high state gasoline taxes (among the highest in the nation at over 68 cents per gallon in combined state excise and sales taxes), and relative isolation from Gulf Coast refinery supply mean that Los Angeles and San Francisco drivers could see prices per gallon push well above $5.00 — and potentially toward $5.50 or higher — if crude sustains these elevated levels.
The Midwest, which relies heavily on refineries in the PADD 2 region, often sees a slight lag in price increases but is not immune. Chicago-area prices tend to spike sharply when refinery issues compound crude price increases. The Gulf Coast, home to the largest concentration of U.S. refining capacity, typically sees the lowest retail prices in the country, but even those stations will feel the crude cost pressure. The Northeast, dependent on both pipeline supply from the Gulf and periodic imports, faces its own vulnerabilities, particularly as the region's refining capacity has shrunk significantly over the past decade.
What's Driving This
The immediate driver is geopolitical risk, but the underlying market structure was already primed for volatility. Several converging forces have amplified the price response to the U.S.-Iran conflict.
First, the Strait of Hormuz threat is not theoretical. Iran has previously seized tankers, deployed naval mines, and threatened to close the strait during periods of tension. Markets are pricing in a meaningful probability — even if not a certainty — that physical oil flows could be disrupted. Saudi Arabia, the UAE, Iraq, Kuwait, and Qatar all export oil through the strait. A closure or sustained harassment campaign would affect not just U.S. consumers but global markets from Europe to Asia.
Second, OPEC+ production policy had already kept global supply relatively tight heading into this crisis. The alliance, led by Saudi Arabia and Russia, has maintained voluntary production cuts totaling approximately 3.66 million barrels per day through much of 2025 and into 2026, according to OPEC communiqués. That policy left global inventories lean and reduced the market's ability to absorb a supply shock.
Third, summer driving season in the United States — which peaks in July and August — means demand is near its seasonal high precisely when this supply shock is hitting. U.S. gasoline demand typically runs at 8.8 to 9.2 million barrels per day during peak summer weeks, according to EIA data, leaving little slack in the system.
Fourth, refinery utilization rates in the U.S. were already running high heading into the conflict, meaning there is limited ability to simply run refineries harder to offset higher crude costs with greater output.
Historical Context
To understand whether this price spike is unusual or routine, it helps to look at comparable geopolitical shocks. The most relevant modern parallel is the 1973 Arab oil embargo, when OPEC's Arab members cut off oil exports to the U.S., triggering gasoline lines and a quadrupling of crude prices. More recently, Russia's February 2022 invasion of Ukraine sent WTI crude briefly above $130 per barrel in March 2022 — the highest level since 2008 — and pushed the national average gas price to a record $5.016 per gallon in June 2022, according to AAA data.
The current situation, with WTI estimated near $90–$95 per barrel, is serious but has not yet reached those 2022 extremes. For context, the national average gas price bottomed near $3.00–$3.10 per gallon in late 2023 and early 2024 as crude prices retreated. The move back toward $4.00 or above represents a significant reversal that will strain household budgets, particularly for lower-income drivers who spend a disproportionate share of their income on fuel.
The 2019 drone attack on Saudi Aramco's Abqaiq facility — which temporarily knocked out roughly 5% of global oil supply — caused a single-day WTI spike of nearly 15% before prices partially recovered. That event is a reminder that geopolitical shocks can be sharp but sometimes short-lived if physical supply is not actually interrupted for an extended period.
Regional Breakdown
California is the state to watch first. The West Coast operates as a largely isolated fuel market, and California's strict environmental fuel standards mean it cannot easily import gasoline from other U.S. regions. Los Angeles-area prices per gallon for regular could approach $5.25–$5.60 if crude holds at current elevated levels. Oregon and Washington state will follow California's trajectory closely.
In the Midwest, Illinois — particularly the Chicago metro — is vulnerable to outsized spikes due to its unique fuel blend requirements and pipeline logistics. Prices in Chicago could run 30 to 50 cents per gallon above the national average during a sustained crude spike.
Texas and the Gulf Coast states (Louisiana, Mississippi, Alabama) will see increases but typically remain the most affordable region in the country due to proximity to refining infrastructure. Expect Texas prices to remain 20 to 40 cents per gallon below the national average even during this spike.
Florida, a major tourism state with high summer driving demand, will feel the increase acutely. New York, New Jersey, and New England face elevated prices due to regional refinery constraints and high state taxes.
What Experts Are Saying
Analysts across the energy sector are watching the Strait of Hormuz situation with acute concern. EIA projections, which are updated monthly, are likely to be revised upward in the agency's next Short-Term Energy Outlook if the conflict persists. Goldman Sachs energy analysts have previously modeled scenarios in which a Hormuz closure could push Brent crude above $120 per barrel within weeks — a level that would translate to national average gas prices well above $4.50 per gallon.
AAA has noted in prior conflict-driven price spikes that consumer behavior begins to shift meaningfully when prices exceed $4.00 per gallon nationally, with drivers consolidating trips, carpooling, and reconsidering discretionary driving. GasBuddy's head of petroleum analysis has consistently pointed out that the speed of the price increase matters as much as the magnitude — rapid spikes catch consumers off guard and hit household budgets before they can adjust.
The IEA has the authority to release emergency strategic petroleum reserves from member nations in a coordinated response to supply disruptions. The Biden administration used this tool aggressively in 2022, releasing 180 million barrels from the U.S. Strategic Petroleum Reserve (SPR) over several months. Whether the current administration would deploy a similar response remains a key variable that markets are watching closely.
What Drivers Should Expect
In the near term — the next two to four weeks — gas prices are likely to continue rising as crude oil prices work their way through the refining and distribution system to retail stations. The lag between a crude price spike and its full expression at the pump is typically one to three weeks, meaning drivers may not yet be seeing the full impact of the most recent crude moves.
If the U.S.-Iran conflict de-escalates or a ceasefire is reached, crude prices could retreat sharply — markets tend to price in worst-case scenarios and then partially unwind when the worst doesn't materialize. Conversely, if fighting intensifies or Iran makes any move to threaten Hormuz shipping lanes, another leg higher in crude — and at the pump — is entirely plausible.
For drivers, the actionable advice right now is clear: if your tank is below half, fill up today rather than waiting. Prices are more likely to be higher next week than lower. Use GasBuddy or the AAA TripTik app to find the cheapest stations in your area — during volatile markets, price dispersion between stations widens, and the savings from shopping around can be meaningful. Wholesale club stations (Costco, Sam's Club, BJ's) typically run 10 to 20 cents per gallon below the market average and are worth the detour. If you have a flexible commute, consider consolidating errands into fewer trips until the market stabilizes.