International oil and gas prices remained elevated on Monday, following attacks on Middle Eastern oil facilities over the weekend and indications from the White House that the U.S.-Iran conflict could persist for several more weeks.
According to data from the American Automobile Association (AAA), the national average price for regular gasoline rose by 2 cents to just under $3.72 per gallon, marking the highest level since October 7, 2023. Since the outbreak of the U.S.-Iran conflict, U.S. gasoline prices have climbed by a cumulative 74 cents per gallon. Over the past month, prices have surged by 26.9%, representing the largest monthly increase since Hurricane Katrina.
This sharp price increase directly impacts one of President Trump's key policy achievements. During his second term, gasoline prices had been on a sustained downward trend, falling below $3 per gallon in December of last year to their lowest level since May 2021. The rise in diesel prices has been even more dramatic, increasing by $1.24 per gallon since the conflict began. The current average price for diesel is $4.99, approaching the $5 threshold for the first time since December 2022. Several freight companies have begun imposing significant fuel surcharges, costs that are likely to be passed on to consumers.
On Monday, the global benchmark Brent crude edged up to $103.50 per barrel, while the U.S. benchmark West Texas Intermediate (WTI) crude fell by 1% to approximately $98 per barrel.
Last week, following a U.S.-Israel strike on Iran, Iran effectively closed the Strait of Hormuz, barring most oil tankers from passage. This action triggered what could be the most severe oil supply disruption in history, as approximately 20% of the world's oil supply transits through this waterway. Consequently, both Brent and U.S. crude prices soared to their highest levels since 2022.
The conflict is now in its third week with no immediate signs of resolution. Commodity strategists at ING Groep NV noted in a report on Monday that a U.S. military strike on Iran's Kharg Island on Friday heightened market concerns over oil supply, as the majority of Iran's oil exports are shipped from this location. Although the targets appeared to be military facilities rather than energy infrastructure, the strike still poses a supply risk, "particularly as Iranian oil is currently almost the only crude transported through the Strait of Hormuz."
The United Kingdom is collaborating with allies to reopen the Strait of Hormuz, with President Trump urging various nations to provide assistance. Shortly after the attack on Kharg Island, debris from an intercepted Iranian drone fell on a critical oil terminal in the UAE, suspending operations and highlighting the threat the conflict poses to Middle Eastern oil facilities.
While the U.S. has not yet targeted Iranian oil infrastructure, President Trump warned in a post on his Truth Social platform on Friday evening that this stance could be reconsidered if Iran continues to interfere with vessel transit through the Strait of Hormuz.
Jim Reid, Head of Macroeconomic Research at Deutsche Bank, summarized in a report on Monday: "Markets remain concerned about further escalation of the conflict, and as time passes, investors are beginning to price in a more prolonged confrontation."
On Sunday, President Trump urged China and U.S. allies to deploy naval vessels to help resolve the shipping disruption in the Strait of Hormuz, warning that NATO would face a difficult future if assistance was not provided. No country has yet committed to sending ships.
Meanwhile, Iran continues to exert pressure, including by laying mines in the strait and vowing to strike any U.S.-related oil and gas infrastructure. Since the conflict began on February 28, more than ten vessels have been attacked in the Strait of Hormuz. In a Sunday interview with CBS, Iranian Foreign Minister Araghchi stated that Iran is willing to negotiate with countries that wish to pass through the strait safely.
Also on Sunday, the International Energy Agency announced that following an agreement by member countries last week to release 400 million barrels of oil from reserves, emergency petroleum stocks would soon be deployed to global markets. Reserves from Asia and Oceania will be activated immediately, while stocks from the Americas and Europe will begin being released by the end of March.
Over the weekend, the Trump administration took several measures to expand U.S. oil production in response to rising fuel prices. On Saturday, the administration approved a new project for BP PLC in the Gulf of Mexico—the company's first new project since the 2010 Deepwater Horizon oil spill. Additionally, Energy Secretary Chris Wright directed Sable Offshore to restart offshore oil drilling platforms and pipelines off the coast of Southern California.
The effective closure of the Strait of Hormuz has implications far beyond the oil sector. Global farmers depend on fertilizers shipped through the strait, which could drive up food prices. Perishable seaborne goods such as dairy products, fruits, vegetables, and fish are likely to be among the first categories to experience price increases.
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