The Brief

The average U.S. gasoline price has climbed to $3.68 per gallon — up roughly 23 percent since the Iran war began on February 28 — while diesel surged 96 cents in a single week to $4.86, the largest weekly increase since the Energy Information Administration began tracking prices in 1994. The Strait of Hormuz, which carries 20 percent of the world’s seaborne oil, has seen tanker traffic drop to near zero following Iran’s retaliatory closure.

The Report

U.S. fuel prices are rising at a pace not seen since the early months of the Russia-Ukraine war, driven by the near-total shutdown of oil transit through the Strait of Hormuz following joint U.S.-Israeli military strikes on Iran on February 28.

The national average for regular gasoline stood at $3.68 per gallon as of March 14, according to AAA — up from approximately $2.98 before the conflict began. Diesel has moved faster and harder: the EIA recorded a weekly increase of 96 cents to $4.86 per gallon for the week ending March 9, surpassing the previous record of 75 cents set in March 2022 after Russia’s invasion of Ukraine. California diesel reached $6.10 per gallon. Brent crude touched $126 per barrel at its peak before settling closer to $99.

The disruption centres on the Strait of Hormuz. Roughly 20 million barrels of oil pass through the waterway daily. Iran’s Islamic Revolutionary Guard Corps issued warnings prohibiting vessel passage after the U.S.-Israeli strikes, and tanker traffic — initially down 70 percent — has since fallen to approximately zero. Iraq suspended oil terminal operations after attacks on tankers in Iraqi territorial waters.

The ripple effects are arriving quickly. Fuel accounts for 50 to 60 percent of total shipping operating costs and roughly 21 percent of trucking cost per mile, according to the American Trucking Research Institute. A 24.75 percent fuel surcharge is already being applied by carriers. Patrick De Haan, petroleum analyst at GasBuddy, described the spike as “a massive jolt” to the logistics, trucking, and agricultural sectors. Gregory Daco, chief economist at EY-Parthenon, warned that monthly inflation could reach 1 percent in March — the highest in four years — and that annual CPI could climb from January’s 2.4 percent to above 3 percent.

The administration has responded with the largest coordinated oil release in history. Energy Secretary Chris Wright announced 172 million barrels would be drawn from the Strategic Petroleum Reserve over 120 days — part of a broader 400-million-barrel release agreed by the International Energy Agency’s 32 member nations. The White House also eased some sanctions on Russian oil exports and proposed Navy escorts for tankers through the strait, possibly beginning by the end of March. The U.S. International Development Finance Corporation is offering up to $20 billion in shipping insurance for Persian Gulf vessels.

President Trump told supporters at a rally that “oil prices are already coming back down,” calling the war “a very small price to pay for safety and peace.” Multiple industry analysts noted that prices remain stubbornly elevated. J.P. Morgan’s David Kelly suggested gasoline could stay high through the summer due to seasonal demand. In January, before the war, GasBuddy had forecast the 2026 national average at $2.97 per gallon — what would have been the lowest since 2020. The current price is already 24 percent above that projection.

The Angle

The interesting number is not the gasoline price. It is the diesel number — and what it reveals about where the actual vulnerability sits.

Gasoline is visible. It is the number on the sign outside the petrol station, the figure politicians are asked about on camera, the data point that tracks neatly against approval ratings. Diesel is invisible to most consumers and load-bearing for the entire economy. Every good that moves by truck, rail, or ship moves on diesel. The 96-cent weekly spike — the largest since federal tracking began — is not a consumer story. It is a logistics story, and logistics stories become consumer stories on a delay of roughly four to six weeks, by which point the original cause has usually left the news cycle.

The administration’s response follows a pattern worth noting. The Strategic Petroleum Reserve release — 172 million barrels, the largest coordinated draw in the IEA’s history — is a buffer, not a solution. It addresses the supply shortfall on paper. It does not reopen the Strait of Hormuz. It does not resume Iraqi terminal operations. It does not alter the basic structural fact that 20 percent of global seaborne oil was transiting a single chokepoint controlled by a state the U.S. had just struck. The SPR is a tool designed for temporary disruptions. Whether this disruption is temporary is not a question the SPR can answer.

What the pre-war forecast makes plain is the distance between the economy that was expected and the economy that arrived. A projected annual average of $2.97 per gallon — the lowest in six years — against a current reality of $3.68 and climbing. That gap is not just a price difference. It is the difference between an inflation trajectory that was finally cooling and one that has reversed course in a matter of days. Every downstream cost calculation made in January — freight contracts, food pricing, consumer spending projections — is now wrong. The question supply chain analysts are quietly working through is not whether those costs get passed to consumers, but how fast.