Americans Pay $45 Billion More for Fuel Amid Iran Conflict

Americans have paid $45 billion more for gasoline and diesel since the Iran war began in late February [1, 2]. The national average for regular gasoline reached $4.55 a gallon on Friday, a more than 50% increase since the conflict started [2]. Analysts warn that prices could surpass $5 a gallon in June if shipping through the Strait of Hormuz remains blocked [2].

The conflict has caused the largest oil supply disruption in history, with roughly 20 percent of global oil shipments choked off in the Strait of Hormuz [1]. This disruption has rattled global markets, sending crude oil prices up more than 40% above pre-war levels [2]. The added fuel costs represent one of the clearest economic consequences of the widening Middle East conflict [2]. A Brown University tracker estimated the added burden on Americans at $44.9 billion as of Friday, with $24.97 billion attributed to gasoline and $19.85 billion to diesel [2].

The crisis is also prompting shifts in energy consumption globally. In Asia, which was projected to drive future oil demand growth, countries are rethinking their reliance on fossil fuels [1]. Factories in Japan are producing fewer petrochemical products, and gasoline demand in South Korea has fallen [1]. Some experts believe this could mark the beginning of a global shift away from fossil fuels, potentially leading to a peak in oil demand sooner than anticipated [1]. Countries like Pakistan, the Philippines, and Sri Lanka have introduced four-day work weeks to reduce commutes [1].

While President Trump has suggested prices will fall once the war ends, oil supplies could remain tight for months due to facility repairs and well restarts [1]. This second major oil shock in recent years, following Russia's invasion of Ukraine in 2022, may lead to a prolonged decrease in demand, especially as scalable, cost-competitive alternatives like solar, wind, and electric vehicles become more widespread [1]. The question remains whether these behavioral changes, spurred by the price shock, will endure even after shipping routes reopen [1].