Gas prices in the US are climbing back to record levels as the hot conflict between Washington and Tehran heightens concerns over oil supply. According to data from the American Automobile Association (AAA), the average price per gallon reached $3.98 as of Thursday, marking a 20-cent increase in 10 days.
Behind the sharp rise in prices are the disruption of maritime traffic in the Strait of Hormuz due to the Iran war and the tightening of global petroleum product supply caused by Ukraine's drone attacks on Russian refineries. These developments are increasing financial pressure on consumers during the peak of the summer travel season.
Thomas Wynandi, chief economist at the Upside app, told Bloomberg that July is typically the busiest travel period and that this volatility in gas prices is straining household budgets.
The approach of gas prices to the $4 threshold is strengthening doubts about the sustainability of the inflation slowdown. Ahead of the November congressional midterm elections, rising living costs are intensifying political pressure on President Donald Trump and Republicans. Democrats have already placed the economic effects of Trump's policies at the center of their criticism.
The collapse of the temporary ceasefire between the US and Iran and the escalation of mutual attacks also pushed oil prices higher. On Friday, the price of Brent crude rose 3.85% to $87.45 per barrel, while West Texas Intermediate crude climbed 3.9% to $82. Both oil benchmarks gained about 13% this week.
The escalation led to a sharp drop in oil flows through the Strait of Hormuz. Iran reportedly instructed the Houthis in Yemen to close the Bab el-Mandeb Strait if the US strikes its electricity infrastructure. Iran announced on Friday that it had carried out new attacks on US facilities in the region, including a target in Syria. The US Central Command, meanwhile, announced on Thursday that it had launched a new wave of attacks against Iran.
