Gasoline Climbs Back Above $4 a Gallon as Iran War Tightens Oil Supply

The national average price of regular gasoline reached $4.00 a gallon on Monday, the first time it has been at or above that level since June 17, NBC News reported. Prices had dipped to $3.79 a gallon on July 7 and 8. The Associated Press, in a report carried by Military.com, put the average at about $4 on Tuesday, with international benchmark Brent crude trading above $88 a barrel.

Crude oil has been climbing on fears of lost supply from the Persian Gulf. NBC reported that U.S. crude rose nearly 1 percent Monday to $83.23 a barrel, its highest close since June 12, while Brent rose 1.3 percent to $89.22, its highest since June 11. Both benchmarks gained more than 15 percent in the prior week, their second straight weekly gain, and more than 20 percent over two weeks, and are up about 45 percent since the start of the year.

The main driver is the standoff over the Strait of Hormuz, which NBC said normally carries about 20 percent of the world’s energy supplies. According to NBC, the United States revoked a sanctions waiver on Iranian oil on July 7, President Trump declared the ceasefire with Iran “over” a day later and later announced a renewed blockade of the strait. NBC reported that eight ships crossed the strait on Sunday, compared with an average of 130 a day before the war; the AP, citing Lloyd’s List Intelligence, counted three. The AP reported that traffic has “slowed to a crawl,” and that Iran’s Revolutionary Guard claimed an attack on a tanker off Oman early Tuesday.

JPMorgan analyst Natasha Kaneva told NBC that “the back-and-forth is hardening into a standoff over who controls the Strait.”

Russia is adding to the pressure. NBC reported that Moscow banned exports of key refined products from July 8 until the end of July because Ukrainian attacks have knocked out much of its refining capacity. HSBC analysts noted that Russia is now looking to import diesel, which tightens global supply. Jet fuel was $3.57 a gallon as of Friday, about 43 percent above the pre-war average of $2.50, NBC reported.

The White House has said oil and gas prices will fall again as the U.S. military degrades Iran’s ability to attack commercial shipping, NBC reported. The AP reported that U.S. airstrikes on Iran reached a tenth consecutive night on Monday and that the interim deal signed last month has collapsed. Secretary of State Marco Rubio has said the United States remains open to negotiation but that any talks must be real (“it has to be real”), according to the AP.

For drivers, the move reverses a stretch of relief: the average had fallen to $3.79 on July 7 and 8. NBC’s report did not include regional price breakdowns or a forecast, so how long the increase lasts is not addressed in the reporting.

The two outlets differ on how many ships crossed the strait on Sunday, so those counts are attributed to their sources here. Both agree on the direction: crude is higher, the Gulf remains a flashpoint and pump prices have followed.