The widening U.S.-Israeli conflict with Iran has choked shipments from the Persian Gulf, in effect closing the Strait of Hormuz and sending oil sharply higher; closing the Strait of Hormuz helps explain why markets have jumped to levels not seen since the immediate aftermath of Russia’s 2022 invasion of Ukraine.
That supply shock has already reached American drivers. The AAA national average for regular gasoline has surged to the highest level of either of President Donald Trump’s terms, adding strain to household budgets even where domestic crude output remains robust.
Two mechanics are behind the move: a near shutdown of Gulf shipping and a squeeze on regional production. Unable to move crude, some producers have been forced to stop wells and, according to industry reporting, Iraq has effectively cut output by more than two-thirds, leaving storage full and few options to calm prices quickly.
