U.S. drivers will pay gasoline prices near four-year highs when they fuel up for travel over the long Memorial Day weekend and should expect more pain at the pump this summer if the Strait of Hormuz does not reopen.
The average gasoline price stood at $4.55 per gallon on Friday, an increase of more than 50% since the U.S. and Israel began the war with Iran on Feb. 28, according to AAA. It is the most drivers have paid on the Friday before Memorial Day since 2022, following Russia’s full-scale invasion of Ukraine.
Prices dipped slightly from Thursday when drivers paid the most on average since July 2022.
Prices at the pump have surged as U.S. crude oil prices have spiked more than 40% from prewar levels due to Iran’s blockade of the Strait of Hormuz. The strait connects big Persian Gulf producers to global markets, making it the most important oil export route in the world. Its closure has triggered the largest disruption to oil supplies in history.
Gasoline prices could hit $5 per gallon sometime in June if Hormuz remains closed, said Patrick De Haan, head of petroleum analysis at GasBuddy.
Oil prices fell nearly 7% ahead of the holiday this week after President Donald Trump said he called off imminent strikes on Iran to give more time for negotiations. But Trump has repeatedly promised the war will end quickly, only for tensions with Iran to escalate and oil prices to surge again.
“The president implies that there’s a lot of progress, but I don’t know how many more head fakes we’re going to see,” De Haan said.
The market needs to see verifiable, definitive steps taken to reopen Hormuz before the prospect of $5 gasoline is off the table, De Haan said. Prices at the pump probably will not fully normalize until well into 2027 even if Hormuz reopens, the analyst said.
Trump told reporters Tuesday that he is not thinking about the finances of Americans “even a little bit” as he tries to negotiate a deal with Iran.
“I don’t think about Americans’ financial situation,” Trump said. “I don’t think about anybody. I think about one thing: We cannot let Iran have a nuclear weapon.”
Global oil inventories are declining fast with just four to six weeks until gasoline, diesel and jet fuel prices shoot higher as the buffers are run down, said David Goldwyn, who served as the State Department’s special envoy and coordinator for international energy affairs from 2009 to 2011.
The U.S. is insulated from the threat of actual physical fuel shortages due to its robust domestic production and strategic reserves, analysts say. But Asia and Europe are competing for U.S. crude oil and refined product exports due to the loss of supplies from the Middle East, Goldwyn said. This competition will put upward pressure on U.S. domestic prices, Goldwyn said.
“The reason we will be looking at $5 gasoline — we’re probably already looking at $6 diesel, but maybe $7 diesel — is because of global competition for products,” Goldwyn said.
