Gas prices hit $4 again after oil soars more than 15% in a week

The national average price for regular gasoline hit $4 per gallon again Monday as the renewed conflict with Iran and Ukraine-Russia attacks rattle energy markets. It’s the first time that the national average has been at $4 or higher since June 17. On Monday, U.S. crude oil rose nearly 1% to $83.23 per barrel, its highest closing price since June 12. International Brent oil jumped 1.3% to $89.22 per barrel, its highest closing value since June 11. Gas prices had fallen in recent weeks to as low as $3.79 on July 7 and 8, but have trended higher again over the last two weeks as Washington and Tehran exchange daily attacks in a battle over the crucial Strait of Hormuz. On Friday, oil prices posted their second straight weekly gain. Last week alone, U.S. crude oil and international Brent crude oil both rose more than 15%. Over the last two weeks, prices have risen more than 20%. Oil prices began rising again after the U.S. revoked a sanctions waiver on Iranian oil July 7. One day later, President Donald Trump announced that the ceasefire with Iran was “over.” Days later, oil prices climbed after Trump announced that he was “reinstating the Iranian blockade” in the Strait of Hormuz. That blockade is “against vessels transiting to or from Iranian ports and coastal areas,” the U.S. military said. Trump also said last week that the U.S. would seek to be “reimbursed, at the rate of 20% on all cargo shipped.” Shipping companies and international maritime organizations quickly rejected the idea as a violation of international law. But the uncertainty continued. Although Trump said he would drop the fee, oil prices continued rising on near-daily U.S. strikes against Iran, as well as Iranian retaliation. It all centers on the struggle for control over the Strait of Hormuz, the waterway through which 20% of the world’s energy supplies typically transit on their way to global markets. “Rather than pursuing full closure, Tehran appears intent on establishing authority over navigation itself through mandatory transit protocols and transit fees,” JPMorgan Chase commodities analyst Natasha Kaneva wrote Thursday. “The back-and-forth is hardening into a standoff over who controls the Strait, and has abruptly stalled the traffic recovery that began in early June,” Kaneva continued. Last week, ship crossings in the strait dropped to a three-week low, according to data from MarineTraffic and Kpler. Between Friday and Sunday, only 30 ships crossed the strait, with just eight crossings Sunday — a stark drop from the average of 130 ships that transited every day before the war started. In a statement, the White House said that oil and gas prices would fall again as the U.S. military degraded Iran’s ability to attack commercial shipping in the strait. “President Trump remains committed to unleashing American energy dominance, cutting costs, and putting more money back in the pockets of hardworking American families,” White House spokeswoman Taylor Rogers said. There is another dynamic this week impacting oil prices: Ukrainian attacks on Russian oil facilities. “Developments in the Russia-Ukraine war are playing more of a role recently too,” wrote HSBC commodities analysts in a client note. “Russia, the world’s second-largest exporter of diesel after the U.S., banned exports of key refined products on 8 July, until end-July, as a growing share of Russian refining capacity has been knocked out amid escalating attacks on its energy infrastructure by Ukraine,” they wrote. “This is on top of existing restrictions on most shipments of gasoline and jet fuel.” Since the start of the year, U.S. crude and Brent oil prices have risen about 45%. “At the same time, Russia is also now looking to import diesel itself; so there is less supply, and more demand in the global market,” the analysts added. Jet fuel prices are also rising again. Before the Iran war, jet fuel averaged $2.50 per gallon. As of Friday, that price was nearly 43% higher, at $3.57 per gallon, according to data from the Argus U.S. jet fuel index.