Average US gas prices have hit a new high at $4.23 per gallon, their highest since 2022 and a record since the start of the war with Iran, according to the motor club AAA.
The price of Brent crude, the benchmark that influences the price of gasoline in the US, now stands at $114.60 a barrel, up nearly 25% from the recent low since mid-April. US gas prices a year ago averaged $3.16.
The milestone comes as US officials contemplate an extended blockade by the US and Iran of the strait of Hormuz, the transit chokepoint for 20% of the world’s oil.
“A significantly bigger risk arises if higher gasoline and oil prices leak into other necessities such as grocery and utility prices – though so far there is little evidence for this,” said Bank of America analysts in an NBC News report.
Donald Trump told aides to prepare for a long blockade to throttle Iran’s economy by blocking Iranian oil shipments – a less risky option than escalating the conflict with a resumption of bombing or walking away from the conflict without a nuclear deal, according to a report in the Wall Street Journal on Wednesday.
As oil continued to rise, reaching $119 a barrel in afternoon trading, Trump told Axios: “The blockade is somewhat more effective than the bombing. They are choking like a stuffed pig. And it is going to be worse for them. They can’t have a nuclear weapon.
“They want to settle. They don’t want me to keep the blockade. I don’t want to [lift the blockade], because I don’t want them to have a nuclear weapon,” Trump said.
The number of ships transiting the strait is now at its lowest level since the start of the war. There were 35 transits during the week of 20 April to 26 April, down from 78 the week before, according to data from Lloyd’s List Intelligence. Before the war, about 130 ships passed through the strait daily.
On Tuesday, Trump claimed on Truth Social that Iran had informed the administration that it was in a “State of Collapse”.
“They want us to ‘Open the Hormuz Strait,’ as soon as possible, as they try to figure out their leadership situation,” he said.
Trump later posted on Truth Social on Wednesday morning, alongside a doctored image of himself holding a gun that read “no more Mr. Nice Guy”!” that “Iran can’t get their act together. They don’t know how to sign a nonnuclear deal. They better get smart soon!”
The surge in oil prices has compounded the typical price increases seen this time of year as refineries undergo maintenance and the spring-summer driving season begins.
US consumer confidence unexpectedly edged higher in April to a four-month high, said the survey from the Conference Board on Tuesday. The survey also showed that people are planning fewer vacations over the next six months and the share of those intending to drive to their holiday destinations was the lowest since April 2020.
The gas price rises come as the United Arab Emirates announced on Tuesday it will leave the Opec oil cartel, a win for Trump, who has accused the group of “ripping off the rest of the world” by colluding to raise crude prices.
The rise in crude prices is also affecting air travel, with some carriers raising prices, cutting routes and adding additional fees as the price of aviation fuel increases. Fuel costs soared by more than 70% since the start of the war, according to the Platts Jet Fuel Price Index.
In Europe, the price of jet fuel has risen nearly 84% since the start of the conflict on 28 February.
“There is a risk that we’ll see rationing of fuel supply, particularly in Asia and Europe,” Willie Walsh, head of the International Air Transport Association, told Reuters on Tuesday.
“I think Covid was on a completely different scale. What we’re seeing here is, in effect, a cost issue for the airlines. The underlying demand for aviation remains robust, and that’s a positive.”