Recent U.S. military strikes on Iranian nuclear facilities have sent ripples through global oil markets, raising concerns about potential gas price hikes as summer travel season approaches.
While oil prices have fluctuated, experts predict a modest rise in U.S. gas prices, with the possibility of larger spikes depending on Iran’s response.
As of June 23, 2025, the national average gas price in the United States stands at $3.22 per gallon, according to AAA, up approximately 8 cents from last week but still 22 cents lower than the same period last year.
This increase follows a surge in oil prices triggered by escalating tensions in the Middle East, particularly after U.S. airstrikes on Iran’s nuclear sites—Fordow, Natanz, and Isfahan—over the weekend.
Oil prices, which account for more than half of retail gas prices, saw West Texas Intermediate (WTI) crude peak at $78 per barrel and Brent crude hit a five-month high following the strikes.
However, prices settled down by more than 7% on Monday, June 23, after Iran’s retaliation targeted a U.S. military base in Qatar rather than disrupting oil tanker traffic through the Strait of Hormuz.
This critical waterway, which carries about 20% of the world’s oil, remains a focal point for market watchers, as any closure could significantly disrupt global supply.
Why Gas Prices Are Rising
The recent U.S. strikes, combined with ongoing Israel-Iran conflicts that began intensifying on June 13, 2025, have introduced a geopolitical risk premium to oil prices.
Goldman Sachs estimates this premium at $12 per barrel for Brent crude, which has risen 12% since the conflict’s onset.
Analysts attribute the current gas price increase to several factors:
- Geopolitical Uncertainty: The U.S. strikes followed Israeli attacks on Iranian nuclear and oil infrastructure, prompting fears of retaliatory actions that could disrupt oil exports. Iran’s parliament has threatened to close the Strait of Hormuz, though such a move would require approval from Iran’s supreme leader, Ali Khamenei.
- Seasonal Demand: Summer travel typically increases gasoline demand, exerting upward pressure on prices. Despite a current oversupply, this seasonal trend could amplify the impact of any oil market disruptions.
- Regional Variations: States like Florida and Massachusetts have seen sharper increases, with Florida’s gas prices jumping 16 cents per gallon and Massachusetts reporting a “surge” due to rising oil costs.
How Much Will Gas Prices Increase?
Analysts offer a range of projections based on Iran’s potential response:
- Modest Increases Likely: Experts predict a rise of 5 to 15 cents per gallon in the coming weeks if the conflict does not escalate further. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that gas prices have risen about 12 cents since the conflict began but could stabilize or even drop to $3.10 by July 4 if de-escalation occurs.
- Worst-Case Scenarios: Should Iran disrupt oil shipments through the Strait of Hormuz, oil prices could surge to $100–$120 per barrel, potentially pushing gas prices up by 5–10% or more. However, Iran’s own economic reliance on oil exports makes a full closure of the Strait unlikely.
- Regional Impacts: In states like New Jersey, prices have already risen 10 cents per gallon, while South Carolina and other regions report smaller increases.
Giovanni Staunovo, a UBS commodities analyst, emphasized that the current risk premium could fade if no supply disruptions occur, but uncertainty around Iran’s next moves keeps markets on edge.
While the immediate outlook suggests modest price increases, the potential for sudden spikes remains.
AAA spokesperson Mark Schieldrop noted that geopolitical tensions are not the sole driver of recent price hikes, as seasonal demand and market dynamics also play a role.
For drivers, this means planning ahead to mitigate costs:
- Shop Around: Use apps like GasBuddy to find the cheapest fuel stations in your area. Prices can vary significantly even within the same city.
- Improve Fuel Efficiency: Regular vehicle maintenance, such as checking tire pressure and avoiding aggressive driving, can save fuel. Combining trips and carpooling also reduce consumption.
- Consider Membership Benefits: Retailers like Costco and Sam’s Club often offer discounted gas prices for members, potentially offsetting rising costs.
- Monitor Market Trends: Stay informed about oil market developments, as de-escalation in the Middle East could lead to price relief by early July.
Also Read: An Imbalance in The Housing Market May Now Plunge Prices
The Bigger Picture for Gas Prices
The U.S. does not heavily rely on Iranian oil, but global market dynamics mean that disruptions in the Middle East can still affect domestic prices.
China, a major buyer of Iranian oil, could face supply challenges that indirectly impact U.S. consumers through global trade.
Additionally, President Donald Trump’s administration has signaled efforts to keep oil prices in check, with White House officials noting that other oil-producing countries have reserves to offset potential shortages.
However, the conflict’s broader economic implications extend beyond gas prices. Rising oil costs could fuel inflation, affecting goods and services, particularly in import-dependent regions.
For now, markets are cautiously optimistic following Iran’s decision to avoid disrupting oil shipments, but the situation remains fluid.
As drivers prepare for the July 4 weekend, the trajectory of gas prices hinges on Iran’s next moves and the broader geopolitical landscape.
While a catastrophic spike is not currently anticipated, consumers should brace for moderate increases and take proactive steps to manage fuel costs.
By staying informed and adopting smart driving habits, Americans can navigate this period of uncertainty with greater confidence.
Back to Daily Market News.
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