SouthernWorldwide.com – Fuel prices are on the rise again, influenced by escalating tensions between the United States and Iran.
The average price for gasoline across the U.S. saw an increase on Friday, reaching $3.88 per gallon. This marks a rise from $3.84 recorded the previous week, according to data from AAA.
In the preceding weeks, gas prices had dipped, hitting lows of $3.80 on July 5. This decline followed a temporary ceasefire agreement signed between Washington D.C. and Tehran in the previous month.
Before the conflict involving Iran began in late February, regular gasoline averaged $2.98 per gallon. The auto group noted in a report that gas prices are climbing again as the stability of the U.S.-Iran ceasefire remains uncertain.
The recent surge in hostilities in the Middle East has rekindled concerns about potential disruptions to trade routes. Specifically, the Strait of Hormuz, a vital waterway for global energy transport, handles approximately 20% of the world’s energy flows.
President Trump reaffirmed his position on Friday, stating that the ceasefire with Iran was “over” after less than three weeks. However, he also indicated that negotiations would continue.
Data from S&P Global MINT and S&P Global Commodities at Sea revealed a significant drop in maritime traffic through the Strait of Hormuz. On Thursday, the number of ships passing through fell to 34, the lowest daily figure since June 28.
This date coincided with Iran’s drone attacks in the region, which occurred in the aftermath of U.S. airstrikes against the Islamic Republic. The financial research firm highlighted that traffic associated with Iran and those under sanction remained elevated.
“Iran-linked and sanctioned traffic remained elevated, accounting for roughly one-third of total crossings,” the firm stated, referring to vessels navigating the strait on July 9.
The price of crude oil plays a substantial role in the cost of gasoline, accounting for 51% of the price per gallon. This makes crude oil the primary determinant of fuel prices, according to the Energy Information Administration.
The process of refining crude oil into various fuels, including gasoline and jet fuel, contributes approximately 20% to gas prices. Other contributing factors include marketing and distribution expenses, alongside state and federal taxes.
Beyond the U.S.-Iran situation, other geopolitical events are also impacting global crude and gas supplies. Attacks targeting Russian oil refineries and other facilities by Ukraine are having a notable effect, according to Patrick De Haan, a petroleum expert at GasBuddy.
“Every refinery knocked offline in Russia removes refined products like gasoline and diesel from the global market, even if crude oil itself keeps flowing,” De Haan explained in a report.
He further commented that Moscow’s retaliatory measures have exacerbated an already tight global market. Russia has imposed an outright ban on diesel exports, in addition to existing restrictions on gasoline and jet fuel exports, aiming to retain fuel within the country.
De Haan also pointed out the typical seasonal increase in driving during the summer months, which leads to higher fuel demand and consequently pushes up gas prices. Additionally, environmental regulations necessitate the production of summer-blend gasoline to mitigate heat-related evaporation.
This transition to summer-blend gas can add between 10 and 25 cents per gallon to the cost, he added.
