U.S. gasoline prices have increased for the first time since May, with the sudden reversal directly tied to the collapse of the tentative ceasefire between the U.S. and Iran. According to AAA data, the U.S. national average price of gasoline clocked in at $3.8590 per gallon on Tuesday, up from $3.7900 a week ago after the end of the ceasefire sparked renewed military exchanges and disruptions in the critical Strait of Hormuz. According to data compiled by GasBuddy, nearly 80% of states saw retail price increases, mirroring a similar rally in crude with oil prices ~15% higher than a week ago.
“While the pace of increases doesn’t yet appear likely to match what motorists experienced in March and April, fresh Ukrainian attacks on additional Russian refineries will only add to the pressure, keeping supplies of refined products tight even as the situation remains fluid,” Patrick De Haan, head of petroleum analysis at GasBuddy, wrote on Tuesday.
The collapse of the U.S.-Iran ceasefire has reopened one of the world’s biggest oil supply risks. U.S. forces have struck Iranian radar sites, air defense systems, and Revolutionary Guard targets, while President Donald Trump reinstated a naval blockade on Iranian shipping and demanded transit fees for vessels passing through the Strait of Hormuz.
Iran has responded with attacks on U.S.-linked military facilities across Bahrain, Kuwait, Oman, and three other countries. The fighting has sharply reduced commercial shipping through the Strait, with maritime intelligence indicating that vessel traffic has fallen by roughly 50%, raising fresh concerns over crude oil and LNG flows through the world’s most important energy chokepoint.
Global energy supplies are facing pressure on two fronts. While conflict has returned to the Middle East, Ukraine has continued its campaign against Russia’s energy infrastructure, knocking out refineries, fuel depots and oil terminals.
Last week, Russia announced a ban on diesel exports in a bid to stabilize its collapsing domestic fuel market following systemic, highly destructive Ukrainian drone attacks on its refineries. Ukrainian forces have bypassed Russian air defenses to cripple key strategic targets, with recent drone barrages knocking out major oil depots and processing terminals in Tver, Stavropol, Bataysk and Ufa. Independent energy analysts estimate the strikes have disabled around one-third of Russia’s refining capacity.
By Alex Kimani for Oilprice.com
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