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President Donald Trump has frequently boasted about his administration’s success in taming inflation. However, recent turbulence in the Middle East may challenge this assertion in the coming days.
In a dramatic shift, the average cost of a gallon of gasoline surged by 12 cents on Monday. This represents the most significant one-day increase since March 2022, according to data from GasBuddy. As of early Tuesday evening, the national average for regular gasoline stood at $3.15 per gallon, a noticeable rise from $2.97 just a week prior.
This sudden hike in gas prices highlights the immediate effects that geopolitical tensions can have on global markets. The recent U.S.-Israeli military actions targeting Iran have sent shockwaves through the energy sector, driving oil prices upward. A key area of concern remains the Strait of Hormuz, a critical maritime chokepoint through which roughly 20% of the world’s oil supply is transported.
In response to these developments, President Trump announced on Tuesday that the U.S. Navy is prepared to escort tankers through the strait should the situation necessitate such measures.
The spike underscores how quickly military action can impact prices, as U.S.-Israeli strikes on Iran rattle global energy markets and send oil prices higher. At the center of the risk is the Strait of Hormuz, the narrow waterway through which about a fifth of the world’s oil passes.
Trump announced Tuesday that the U.S. Navy would begin escorting tankers through the strait if necessary.
“No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD,” Trump wrote on Truth Social.
A prolonged disruption at the crucial mouth of the Persian Gulf could drive up oil prices further, and any sustained rise in energy costs would put renewed pressure on inflation.
Patrick De Haan, head of petroleum analysis at GasBuddy, said he’s paying particular attention to U.S. diesel prices, which rose to their highest level since July 2024 on Monday.
“That is far more impactful to CPI numbers, to what you pay at the grocery store to what you pay the delivery guy,” De Haan told .
Annual inflation eased to 2.4% in January, helped in part by lower gasoline prices, which were down 7.5% from a year earlier, according to the Consumer Price Index.
Even with the recent uptick, prices at the pump are still about $2 cheaper per gallon from the $5 peak in June 2022.
Will inflation accelerate due to conflict with Iran?
The ultimate impact on inflation will depend on how long the military action lasts and how disruptive it is to energy markets.
Jamie Dimon, CEO of JPMorgan Chase, said Monday that he doesn’t expect a major impact on inflation from the conflict with Iran so long as it doesn’t drag on.
“This right now will increase gas prices a little bit,” Dimon told CNBC. “If it’s not prolonged, it’s not going to be a major inflationary hit.”
Mark Zandi, chief economist at Moody’s Analytics, said Monday that the conflict will heighten affordability concerns, but if the increase in oil prices is limited to around $5 per barrel and not sustained, “the economic consequences will be negative, but small.”
Surging oil prices following Russia’s invasion of Ukraine helped drive annual inflation to 9% in mid-2022, but De Haan thinks the current situation is different for several reasons.
“The market has discounted the availability of Iranian crude oil for a while,” De Haan said, citing years of sanctions. “So this doesn’t have the explosive, shocking turn that Russia’s invasion of Ukraine did.”
He added that consumer demand also looks different today and isn’t in a position to surge the way it did in the immediate aftermath of the pandemic. And unlike Russia’s war with Ukraine, the U.S. has more influence over the current situation.
The price for a barrel of Brent crude, the international standard, briefly leaped above $84 on Tuesday before settling at $81.40. That’s up about $10 from last week but remains far below the Russia-Ukraine war peak of nearly $128 per barrel in March 2022.
Still, it may not take much to rattle consumers. A new Reuters/Ipsos poll found nearly 4 in 5 Americans say inflation is a “very big” concern for them personally.
President Trump says military operations against Iran could last four to five weeks but warned the U.S. has the capability to go “far longer.”