Gasoline prices across the United States climbed to an average of $4.30 per gallon on Thursday, marking the highest level in nearly four years. The increase stems from a combination of geopolitical tensions related to the Iran war, shrinking fuel inventories, and refinery disruptions, all of which have pushed crude oil costs higher and translated directly into higher pump prices. This development adds further strain on consumers just ahead of the peak summer driving season.
According to data from AAA, the average price for regular unleaded gasoline rose to $4.03 from last week, up sharply from $3.18 a year ago. Diesel fuel, which is closely tied to freight and delivery costs, averaged $5.50 per gallon. Fuel inflation continues to impact households, retailers, and the Federal Reserve as travel demand typically increases during this period.
Brent crude, the global benchmark, briefly surged past $126 per barrel on Thursday before settling at $121.90 for June contracts. U.S. crude followed suit, touching $108.28 per barrel. For context, Brent was trading near $70 before the conflict in Iran escalated in late February. The Strait of Hormuz remains a critical chokepoint, handling roughly 20% of global oil and gas shipments. According to Reuters, disruptions in this route have contributed to a more than 40% increase in U.S. pump prices since late February. Susan Bell, an analyst at Rystad Energy, noted that no progress has been made in resolving the situation, keeping crude prices elevated.
Despite record U.S. oil production—which reached 13.6 million barrels per day in 2025, according to the Energy Information Administration (EIA)—drivers have not been insulated from global price swings. Analysts told MarketWatch that bottlenecks at refineries and logistics issues have also played a role. Rebecca Babin, senior energy trader at CIBC Private Wealth, explained, “There’s a buffer in the U.S. energy system, but it doesn’t operate in a vacuum.”
The price at the pump is influenced by more than just crude oil. The EIA notes that it also reflects taxes, refining expenses and margins, and costs associated with distribution and marketing. Refining costs vary by region and season; summer’s cleaner fuel blends, mandated across much of the country, typically add a premium on top of higher warm-weather demand.
Supply has tightened rapidly. According to EIA data reported by Reuters, U.S. crude exports surged to a record 6.44 million barrels per day last week, while crude inventories fell by 6.2 million barrels. Gasoline stocks also declined, dropping by 6.1 million barrels to 222.3 million—the eleventh consecutive weekly decline as the summer driving season approaches.
The impact is not uniform across the country. Michigan saw its average regular gas price jump to $4.58 by Thursday from $4.02 at the start of the week, according to CBS Detroit, driven by both global oil moves and local refinery issues. The Midwest has been particularly vulnerable due to refinery outages. Reuters reported that Phillips 66’s Wood River facility and Marathon Petroleum’s Robinson plant in Illinois underwent scheduled maintenance, while BP’s Whiting refinery in Indiana experienced a brief power loss. Rystad data indicated that unplanned outages reached approximately 150,000 barrels per day in April, with planned outages at 670,000 barrels per day.
Retailers have not yet passed the entire cost increase on to consumers. Tom Kloza, chief energy adviser at Gulf Oil, noted that station margins have been under significant pressure, with retailers “taking one for the team.” If wholesale prices remain high, Kloza warned that gas station prices will have to rise; otherwise, some dealers could face losses on fuel sales.
Looking ahead, analysts polled by Reuters have raised their 2026 oil price forecasts for the second time since the Iran conflict escalated, with Brent now expected to average $86.38 per barrel this year. Some caution that prices could remain stubbornly high if the Strait of Hormuz remains closed. However, Dennis Kissler of BOK Financial pointed out that sustained high gasoline prices could lead to “demand destruction,” where drivers reduce travel or cut back on fuel consumption.
While current prices remain below the record high of $5.016 per gallon for regular unleaded set in June 2022, the buffer has narrowed in recent weeks. If crude stays elevated, refineries face further disruptions, or exports continue to drain supply, pump prices could move higher from here.
