U.S. gasoline prices rise as Middle East tensions disrupt global oil market

Gasoline prices in the United States reached an average of $3.87 per gallon on July 13, about 70 cents higher than a year earlier, as crude oil futures climbed following renewed military strikes between the United States and Iran. Brent crude rose about 3% to $78.40 per barrel, and West Texas Intermediate jumped from roughly $67 on Feb. 27 to $105 by the end of March.

Although the United States produces more than 13 million barrels of crude daily and exports more oil than it imports, it still consumes about 6 million barrels a day, with only 8% of imports coming from the Middle East. Analysts say the global nature of oil markets means disruptions in any major supply route can affect prices worldwide. "It’s a global market," said Mark Zandi, chief economist at Moody’s Analytics. "Oil literally flows to the highest price. If a tanker can get a higher price in Malaysia than it can in Rotterdam, it will go to Malaysia."

The conflict raised concerns about the security of shipments through the Strait of Hormuz, a key chokepoint for Middle Eastern oil, prompting a spike in prices as traders priced in the risk of reduced supply and damage to regional infrastructure. "Everybody’s competing for the same barrel of oil," said James Cox, managing partner at Harris Financial Group.

The West Coast, which relies more heavily on Middle Eastern imports, saw gasoline prices climb to $5.93 per gallon in California, according to Kate Gordon, CEO of the sustainability nonprofit California Forward. "We get nothing from east of the Rockies," she noted.

Economists caution that even if the ceasefire holds, elevated fuel prices are likely to persist without new supply sources, as rebuilding damaged oil infrastructure in the region could take years. "There’s no going back to what we had, at least not this year," Zandi added.