Gasoline prices could hit $5 per gallon nationwide if traffic through the Strait of Hormuz, a focal point of the Iran war, remains effectively at a standstill for much longer.
“To date, US retail gasoline prices have already increased to close to $4/gallon, but our commodity team sees a risk of that exceeding $5/gallon if the strait remains effectively closed by mid-April,” JPMorgan’s Joyce Chang and Natasha Kaneva wrote in a client note.
Gasoline at $5 would represent its highest level since June 2022, when prices reached a record of nearly $5.02 per gallon.
On Tuesday, the national average price of gasoline climbed to nearly $4.14, according to AAA data, up roughly about $0.80 from a month ago.
Read more: How an extended war with Iran could push gas prices higher
Higher fees and taxes, along with limited refining capacity and reliance on imported refined fuel, some of which typically comes from Asia, have put outsized upward pressure on prices along the West Coast.
Prices in California hovered at $5.92 per gallon on Monday, with cities like San Francisco are already seeing prices reach $6 at the pump. Meanwhile, diesel costs in the Golden State hit a record high on Monday at $7.68 per gallon.
JPMorgan analysts estimate that every $0.10 increase in the average price of regular gasoline this year would add another $12 billion to annual gasoline spending, eating up much of, or even all, the expected tax benefit from the Trump administration’s One Big Beautiful Bill Act.
“Our US economics team estimates that the recent increase in the gasoline price, if it persists for the rest of this year, should amount to around a $100bn hit to consumers’ purchasing power,” they added.
Commodity researchers have been warning of rolling disruptions worldwide, with some smaller Asian countries already reporting outages, reduced flights, and remote schooling.
US crude futures (CL=F) rose above $112 per barrel, while Brent for June deliveries (BZ=F) rose above $109 per barrel amid reports that Iran rejected the US’s latest ceasefire proposal. Meanwhile, spot prices of oil shipments sold in the North Sea recently topped $140, their highest price since 2008, underscoring supply tightness.
President Trump threatened to deploy further strikes on Iran’s bridges and infrastructure if the country did not make a deal and reopen the Strait of Hormuz by 8 p.m. ET on Tuesday.
Shipping traffic through the critical waterway, through which roughly 20% of the world’s oil flows, has remained largely halted since the war broke out on Feb. 28, with Iran blocking the transit of vessels aligned with the US and Israel.