On March 16, the average gasoline price in the U.S. was $3.76 per gallon ($0.99 per liter). This is the highest level since October 2023, according to data from the fuel price tracking site GasBuddy.
“Unless oil flow through the Strait of Hormuz is significantly restored, upward pressure on fuel prices is likely to persist,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
Since the conflict in the Middle East erupted at the end of February, gasoline prices in the world’s largest economy have increased by nearly 80 cents per gallon ($0.20 per liter). Over the past month, the increase has been nearly 30% – the highest since Hurricane Katrina struck the U.S. in 2005.
The increase in diesel prices has been even stronger. The average retail price of diesel has surpassed $5 per gallon ($1.32 per liter). This is the second time in history that prices have exceeded this threshold, as the conflict in the Middle East tightens energy supply. The first time prices exceeded this threshold was in December 2022, when the global oil market was shaken by the Russia-Ukraine conflict.
Economists warn that soaring diesel prices could slow global economic activity, as this type of fuel is used in manufacturing and freight transport. The increase in costs will therefore be passed on to consumers. Fuel price inflation could also pose a significant risk to U.S. President Donald Trump as the country prepares for the midterm elections in November.
The conflict in the Middle East is severely disrupting the global diesel supply chain. This region is a major supplier of both diesel and the crude oil most suitable for producing this fuel.
A series of measures announced recently by the U.S. and other countries, including a record release of oil reserves by the International Energy Agency (IEA), have so far been unable to curb the rise in fuel prices. After yesterday’s session, crude oil prices fell by 3-5% thanks to reports that some ships had successfully passed through the Strait of Hormuz, but rose again this morning.
WTI and Brent prices have now increased by nearly 3%, reaching $96-103 per barrel. The reason for the price increase is concerns over supply as the Strait of Hormuz remains largely closed and U.S. allies refuse calls to deploy warships to assist oil tankers passing through.