President Trump's address to the nation, in which he pledged more aggressive action against Iran and said he would "bomb Iran back into the 'Stone Ages'," intensified pressure on U.S. fuel markets this week. Rather than presenting a concrete plan to reopen the Strait of Hormuz - the global shipping chokepoint that has been partly blocked by Iran - Mr. Trump said the strait would reopen "naturally" once the conflict ends. The remarks drove U.S. crude oil prices up by more than 10% on Thursday.
Market analysts said the speech altered expectations for the summer travel season, putting consumers at risk of facing historically high pump prices at a seasonally sensitive moment.
Gasoline outlook
Patrick De Haan, an industry analyst, said U.S. average retail gasoline prices are projected to climb to a range of $4.25 to $4.45 per gallon by next week. The national average had already crossed $4 a gallon earlier in the week - the first time since 2022 - and De Haan warned that the situation could deteriorate further.
De Haan said that if there is no viable plan to reopen the Strait of Hormuz, the U.S. average gasoline price is likely to exceed $5 a gallon and reach record levels within a month.
Wholesale market moves
Wholesale markets began reflecting the surge on Thursday morning. Tom Kloza, chief energy adviser to Gulf Oil, reported midmorning wholesale price increases of 17 cents a gallon in the Great Lakes, Great Plains, Northeast and West Coast markets, and a 19-cent-a-gallon rise in the Gulf Coast market.
Diesel pressure
Diesel, which is less visible to typical retail consumers but closely tied to the cost of producing and transporting goods, is also under upward pressure. De Haan projected the national average retail diesel price to rise from $5.47 a gallon on Thursday to a range between $5.80 and over $6 a gallon within the next two weeks. That trajectory could push diesel past the previous U.S. average retail record of $5.83 per gallon, set in 2022.
Implications for consumers and markets
Analysts emphasize the direct link between crude price movements and retail fuel costs, and the accelerated rise in wholesale and retail prices underscores the near-term risk to household budgets and freight costs. With the summer travel season approaching, the timing of higher pump prices poses a notable strain on consumer spending and the transportation and logistics sectors.
At a glance
- President Trump's remarks on Iran triggered a greater than 10% rise in U.S. crude oil futures on Thursday.
- U.S. average retail gasoline is forecast at $4.25-$4.45 per gallon by next week after recently topping $4.00.
- Absent a practicable plan to reopen the Strait of Hormuz, gasoline could exceed $5 per gallon and reach record levels within a month.
- National average retail diesel, at $5.47 on Thursday, is projected to climb to $5.80 to over $6 within two weeks, threatening the 2022 record of $5.83.