Recreating the Russia-Ukraine conflict! U.S. gasoline prices surged 20% in 11 days, breaking above $3.50 per gallon

Caixin March 12 (Editor: Xiao Xiang)
According to data from the American Automobile Association (AAA) and GasBuddy, the average retail gasoline price across the U.S. this week surpassed $3.50 per gallon, reaching the highest level since May 2024. The escalation of the Israel-U.S. conflict with Iran has heightened supply concerns.

The global surge in fuel prices caused by the blockade of the Strait of Hormuz and disruptions in Middle Eastern oil exports not only threatens consumers’ wallets but also disrupts global economic activity. For U.S. President Trump and the Republican Party, this could become the biggest risk ahead of the November midterm elections—especially considering that one of Trump’s key promises for his 2024 re-election is to lower energy costs.

“Geopolitical shocks can impact your wallet in just a few months, and effects can appear within days,” said William Stern, CEO of Cardiff, a small business lending institution in the U.S. “You can feel this pressure firsthand when you go to fill up for your child’s training.”

Since Trump decided on February 28 to jointly strike Iran with Israel, the U.S. average retail gasoline price has surged nearly 60 cents, reaching $3.58 per gallon on Wednesday—an increase of 20% in just 11 days, comparable to the spike in gasoline prices during the same period four years ago after the Russia-Ukraine conflict, marking an extremely rapid rise.

Will prices continue to rise?

Industry experts point out that with more ships attacked in the Strait of Hormuz on Wednesday and the U.S. shifting toward selling cleaner but more expensive summer gasoline, fuel prices may continue to climb in the coming days.

Denton Cinquegrana, chief petroleum analyst at OPIS (Oil Price Information Service), noted that both spot and wholesale gasoline prices on Wednesday recorded double-digit increases. Wholesale price changes are usually reflected in retail prices at gas stations the next day.

It is worth noting that despite the International Energy Agency (IEA) proposing a record release of 400 million barrels of crude oil from global strategic reserves on Wednesday, crude oil prices—the largest component of fuel costs—continued to rise that day.

Cinquegrana pointed out that the agency’s announcement of releases raised more questions than answers, as it did not specify which countries would release how much crude oil and when.

U.S. Energy Secretary Chris Wray stated on Wednesday evening local time that the U.S. would release 172 million barrels from the Strategic Petroleum Reserve to help lower energy costs during the Iran conflict.

However, many oil traders remain skeptical about the effectiveness of releasing strategic oil reserves. Even with the U.S. releasing oil at the fastest pace and combining supplies from other IEA member countries, it may only cover part of the estimated daily supply loss of 11 to 16 million barrels in the Persian Gulf region, according to Citigroup.