US Gasoline Prices Hit $4 per Gallon, Iran War Triggers Oil Price Spike

JAKARTA - Gasoline prices in the United States have again broken through $4 per gallon. According to ABC News, the average price was reached on Tuesday, for the first time in almost four years, after the US-Israeli war against Iran triggered a new spike in the world oil market.

AAA data cited by ABC News, showed gas prices at the pump have jumped more than 30 percent since the war broke out on February 28. The last time prices breached the $4-a-gallon mark was in August 2022, after Russia's invasion of Ukraine rattled energy markets.

The pressure is coming from the Middle East. Iran's closure of the Strait of Hormuz has the market immediately calculating the most sensitive risk: the blockage of transport routes for about a fifth of the world's oil supply. From there, crude oil prices soared and the impact quickly reached gas stations in America.

In fact, the United States is a net exporter of oil. The country produces more oil than it consumes. However, oil prices are still determined by the global market. This means that when world supplies are disrupted, American consumers still bear the consequences.

ABC News reported that world oil prices on Tuesday were around $104 per barrel, or nearly 50 percent higher than before the war. Crude oil alone accounts for more than half the price of vehicle fuel at gas stations, according to the US Energy Information Agency.

The Executive Director of the International Energy Agency or IEA, Fatih Birol, even said that the current oil crisis has surpassed the combined impact of global energy shocks in the 1970s. In an event in Canberra, Australia, he said the world economy faces a major threat and no country will escape the impact if the crisis continues to move in the same direction.

To withstand the pressure, IEA member countries two weeks ago announced plans to release 400 million barrels of oil from strategic reserves. This is the largest release in the group's history. The Trump administration also prepared the second largest shipment from the national emergency reserve, which includes almost half of the total IEA plan.

Still according to ABC News, Trump also eased sanctions on Russian oil, suspended important rules on domestic oil transportation, and sought to restore tanker traffic in the Strait of Hormuz.