#18 Why the Iran War Is Raising Your Gas Prices
A month before the war with Iran started, you could fill your tank for about two dollars and ninety-three cents a gallon. Today the national average is over three dollars and seventy cents. In some places it is past four dollars. In a few places it is past five.
And the biggest reason is a war happening seven thousand miles from here, over a piece of water about twenty-two miles wide that most people could not find on a map.
Today I am going to walk you all the way through it. How the war started. Why Iran shutting one narrow strait took a fifth of the world's oil off the market. Why that drives up the price of your gas, your groceries, and just about everything else you buy. And what to watch for, because this thing is nowhere near over.
No spin, no panic, just the facts laid out one at a time. By the end of this you are going to understand exactly why you are paying more, and you will be able to explain it to anybody who asks you.
Let me start at the beginning, because none of the price stuff makes sense until you understand the war and how we got here.
This war did not come out of nowhere. For years there has been rising tension over three things in particular. Iran's nuclear program. Iran's ballistic missiles. And how far Iran's reach stretches across the Middle East through the groups it arms and funds. That pressure had been building for a long time.
It boiled over on February 28th of this year. The United States and Israel struck Iran. That is the day the war started.
Iran struck back, and the fighting spread fast across the whole region. Over the following weeks, Iranian strikes hit Kuwait. They hit Dubai and Abu Dhabi over in the United Arab Emirates. They hit Bahrain. People were killed. The entire Persian Gulf, which is one of the most important pieces of ground in the world for oil, turned into a war zone almost overnight.
But the move that reached all the way into your wallet came on March 4th. That is the day Iran declared the Strait of Hormuz closed, and started attacking and threatening any ship that tried to go through it.
Remember that name. The Strait of Hormuz. I am going to keep coming back to it, because that one narrow channel is the center of this entire story.
Now here is something worth knowing, because it tells you how serious this is. Iran has threatened to close that strait for decades. Back in the 1980s, during the war between Iran and Iraq, there was something they called the Tanker War, where ships in the Gulf were attacked. In 2019, tankers were attacked there again. Just last year, in 2025, tensions flared over it one more time. And every single time, Iran rattled the saber, threatened to shut the strait down, and the world held its breath. But they never actually did it. Not all the way. This time, in 2026, they finally pulled the trigger. They actually closed it. That is what makes this different from every close call that came before it.
And they have kept it shut, or close to shut, ever since March. We are now past three months of it.
Now, you may have heard at some point that the war was winding down. There were ceasefire talks. At one point the Secretary of State, Marco Rubio, even said the war was over. But the attacks kept right on going. Iran kept hitting targets. The United States kept hitting back. Saying a war is over and a war actually being over are two different things, and this one was not over.
And this week, it got worse again. As of this week, the United States is striking targets inside Iran for a second straight day. This latest round kicked off after the President blamed Iran for shooting down a United States Army helicopter. And on top of the shooting, the United Nations nuclear watchdog is now demanding that Iran give inspectors access to its nuclear sites. So between the fresh strikes and the nuclear standoff, this thing is not cooling down. It is heating back up.
There is one more piece moving in the background, and you should keep it in mind. Iran is in the middle of choosing a new supreme leader, a new Ayatollah. And the President has said he would be open to sitting down with whoever that turns out to be, if it leads to ending the war. So you have a war going on, and you also have a leadership change going on inside Iran at the very same time. Both of those matter, and we will come back to them at the end.
Now let me put the prices in front of you, because the numbers tell the story plainer than I can.
Since the war began, the price of crude oil is up about sixty percent. Back in May, the main world benchmark for oil was averaging a hundred and seven dollars a barrel. At points it has traded up around a hundred and sixteen.
That works its way down to the pump fast. Gas on the national average went from under three dollars a gallon to over three dollars and seventy cents. One month before that, it was sitting around two dollars and ninety-three cents. One gas station out in Washington state was selling regular for five dollars and twenty-nine cents a gallon. In a whole lot of the country, four dollars a gallon is just normal now, and nobody even blinks at it anymore.
And it is not only gas. Inflation, which had finally been coming back down, is back up over four percent. That means the general cost of living, across the board, started climbing again. And a big chunk of that climb is the oil.
To put those numbers in some perspective, oil has been higher before. Back in 2008 it hit an all-time high of about a hundred and forty-seven dollars a barrel. When Russia invaded Ukraine in 2022, prices spiked again. So we are not at a record yet. But we are in the same neighborhood as those big shocks. And the thing that makes this one different is that it is tied to a strait that is still closed, with no clear date for when it opens back up. Those other shocks had an end you could see coming. This one does not, at least not yet.
So there are your facts. A war that started February 28th. A strait shut on March 4th. Three months of disruption. Fresh strikes this week. Oil up about sixty percent. Gas over three-seventy. Inflation back over four percent.
That is the what. Now I want to show you the why, because the connection between a strait next to Iran and the price you pay right here at home is not complicated once somebody actually walks you through it step by step. So that is exactly what I am going to do.
Alright. Why does a strait sitting right next to Iran set the price of gas here in Tennessee, and everywhere else in this country? Let me build it for you, one piece at a time.
Start with the strait itself. The Strait of Hormuz is a narrow piece of water, about twenty-two miles wide at its tightest point, sitting between Iran on the north side and Oman on the south. It connects the Persian Gulf to the open ocean. And here is the key fact you have to hold onto. It is the only way out of the Persian Gulf by sea. If your oil is coming out of Saudi Arabia, Kuwait, Iraq, the United Arab Emirates, Qatar, or Iran itself, and it is leaving by ship, it has to pass through that one strait. There is no other sea exit. None.
Now, how much oil are we talking about? About a fifth of all the oil used in the entire world ships through that one channel. Some counts of the seaborne crude trade put it closer to a quarter. Either way, you are talking about somewhere around twenty to twenty-five percent of the world's oil squeezing through a gap twenty-two miles wide. There is nothing else like it anywhere on the planet.
This is exactly why military planners and oil traders have watched that strait nervously for fifty years. It has always been the one spot on the map where a single country, Iran, sitting right on top of it, could put its hand around the throat of the world's oil supply. Everybody knew it was the weak point. For decades it stayed a threat and nothing more. Now it is not a threat anymore. Now it is actually happening.
And there is no good way around it. There are a couple of pipelines that can carry a little of that oil overland and skip the strait, but nowhere near enough to replace it. If the strait shuts, most of that oil is simply stuck. It cannot get out.
So now you can start to see why Iran closing it is such a big deal. When Iran declared it closed and started attacking ships, here is the chain of events that followed. Pay attention to this part, because this is the whole machine.
First, the insurance companies pulled out. Every one of those oil tankers carries insurance, because a single tanker and the oil inside it can be worth hundreds of millions of dollars. When Iran started attacking ships, the insurers that cover those tankers took one look at the risk and said, we are not covering that. And no shipping company on earth is going to send a tanker worth that kind of money through a shooting gallery with no insurance on it. So the tankers stopped sailing. A lot of them are sitting at anchor right now, fully loaded with oil, going absolutely nowhere, because nobody will insure the trip.
Second, the producers cut back. The oil producers over there in the Middle East cut their output by more than eleven million barrels a day compared to before the war. Eleven million barrels a day. To give you a sense of how much that is, that is more oil than the entire United States pumps on a lot of days. That much supply just came right off the market.
Third, the world started burning through its reserves. With that much oil not flowing, countries have been pulling oil out of storage to cover what they need day to day. And global oil inventories are now falling toward their lowest levels in more than twenty years. The lowest since 2003. The world is living off its savings account, and that account is running down.
And this is the part that connects all of it straight to you. Less oil for sale means a higher price. That is just supply and demand, the oldest rule in the book. When there is less of something the whole world runs on, everybody bids more to get their share, and the price goes up. For everyone. There is one world market for oil, one world price, and when it climbs, it climbs for all of us at the same time.
Now, you might wonder why the price at your pump moves so fast when all of this is happening on the other side of the world. Here is how it travels. The crude oil price gets set on the world market first. The refineries here buy that crude and turn it into gasoline and diesel, and what they charge, the wholesale price, goes up when crude goes up. Then the gas station buys at that wholesale price and sells it to you with the sign out front. So a jump in the world price rolls downhill, from the barrel, to the refinery, to the wholesale price, to the sign at your corner station. It usually takes anywhere from a few days to a couple of weeks to fully show up. And here is the part that makes everybody crazy. Prices shoot up fast when oil rises, and they crawl back down slow when oil falls. That is not your imagination. That is just how the chain works, and it has always worked that way.
Now here is where somebody always stops me and says, hold on a second. We make our own oil now. We are energy independent. Why does a strait next to Iran have anything to do with us? And that is a fair question, so let me answer it straight, no dodging.
It is true that the United States produces a giant amount of oil. We are the biggest oil producer in the world. We are also the biggest exporter of natural gas in the world. That does help us. We are in better shape than Europe, and we are in a lot better shape than Asia, which leans heavily on that Gulf oil. In fact, here is a thing most people do not realize. Most of the oil that goes through the Strait of Hormuz is not even headed here. Most of it is bound for Asia, especially China.
And that China piece matters more than it might sound. China is the single biggest buyer of that Gulf oil. So when the strait closes, China is out scrambling for oil on the world market, same as everybody else. And China bidding hard for a smaller pool of oil pushes the world price up, which pushes your price up right here at home. We are competing with the entire world for a shrinking supply, and that competition is baked right into the number on the pump.
But here is the catch, and it is a big one. Oil is sold on one global market, at one global price. Even though we pump plenty of our own, the price we pay is set by the world, not just by us. When the world price jumps because a fifth of the supply is stuck behind a closed strait, our price jumps right along with it. We do not get our own special discount just because we drilled the oil here at home. We are chained to the same number as everybody else. So being a big producer softens the blow. It does not make us bulletproof. Anybody who told you energy independence meant a war like this could not touch your gas price was not being straight with you.
And it is not just oil that got hit. Natural gas got pulled into it too. We are the biggest natural gas exporter in the world. And natural gas prices over in Europe jumped more than seventy percent after this war started. When Europe's gas gets that expensive, they come shopping for more of ours, and that pull reaches back across the ocean and lifts prices here. Why does that matter to you? Because a lot of our electricity is made by burning natural gas, and a lot of homes heat with it. So this war can show up in your power bill and your heating bill, not just your gas tank. It gets into the house from more than one door.
And remember, this is not just about the gas in your car. Let me give you two more places this hits you, because most folks never connect these two and they should.
The first is your groceries. Diesel fuel is up even more than gasoline is. Diesel is up over sixty percent. And diesel is what runs the trucks. Think about it for a second. Every single thing in your grocery store got there on a truck. The milk, the bread, the meat, the eggs, the cereal, the canned goods, every bit of it rode in on a diesel truck. When diesel costs sixty percent more, it costs more to haul every one of those items to the store, and that cost gets passed right on to you at the register. So this war shows up in your grocery bill, not just at the pump. A lot of people feel their grocery total creeping up and never once realize it traces all the way back to a strait next to Iran.
And the grocery hit is even worse than that. It is not just the trucks that haul the food. The farmers run on diesel too. The tractors that plant it, the combines that harvest it, the equipment that runs the whole farm, all of it burns diesel. So you actually get hit twice on the same groceries. Once when it costs the farmer more to grow the food, and again when it costs the trucker more to haul it to the store. Two separate diesel hits stacked on the very same loaf of bread.
And it reaches the skies too. Jet fuel is up sharply, around forty percent. That feeds straight into the price of an airline ticket. So if you are planning to fly anywhere this year, that is this same war showing up in your travel budget.
The second place is just about everything else you buy. Oil is not only fuel. Oil is the raw material that plastic is made out of. And plastic is in nearly everything. Your packaging. Your containers. Your phone. Your kid's toys. Parts in your car. Parts in your appliances. When oil goes up, the cost of making all of that creeps up too. It is not dramatic on any single item, but it adds up across your whole budget, a little here and a little there, until the cart that used to cost a hundred dollars costs a hundred and fifteen.
There is even a hard number on the inflation piece. The economists down at the Federal Reserve bank in Dallas ran the math on this. They found that if the strait stays closed for two to three quarters of a year, it could add somewhere between three-quarters of a percentage point and a point and a half to inflation, on top of everything else already going on. That is real money pulled straight out of every household in the country.
So let me put the whole chain back together for you now, start to finish, so it is locked in and you never forget it.
A war started. Iran closed the strait. The insurance companies pulled out, so the tankers stopped sailing. The producers cut eleven million barrels a day. The world started draining its reserves down toward twenty-year lows. With that much oil off the market, the world price shot up about sixty percent. And because we are tied to that one world price, your gas went up, your groceries went up through the cost of diesel, and the price of nearly everything made of plastic crept up right along with it. That is the whole wire, from a strait you had never heard of this morning all the way to the receipt sitting in your pocket right now.
Alright. You understand what happened, and you understand why it hits you. Now let me tell you where this is likely headed, and the handful of things you ought to keep your eye on.
Start with the prices, and be honest with yourself about them. Right now you are paying three-seventy to four dollars a gallon, more in some places. As long as that strait stays closed, that is roughly where you live.
Let me make that real for your own household with some simple math. Say you fill up about four times a month, and your tank holds around fifteen gallons. That is roughly sixty gallons of gas a month for one driver. When the price goes up a dollar a gallon, that is about sixty extra dollars a month, just on gas, just for one person in the house. Over a year, that is around seven hundred dollars. If you have got two drivers under your roof, double it. And remember, that is before you count the higher grocery bills, the higher power bill, and everything else we just walked through. So when somebody asks you how a war on the far side of the world reaches into your life, that is the answer in dollars. Hundreds of dollars a year straight out of your pocket, and more the longer it drags on. And it could get worse before it gets better. Some forecasts have oil climbing past a hundred and twenty-five dollars a barrel if the closure drags on. A few analysts have floated numbers as high as a hundred and fifty to two hundred dollars a barrel in the worst case, though that is the far extreme end and not the most likely path. The point is simple. The risk on the price runs up, not down, the longer this lasts.
Now, here is a fair question. If it could go that high, why has it not already? Why are most traders not betting on the nightmare number? Because most of them are betting the President ends this thing before the damage gets that bad. The cost of a long, drawn-out war is enormous, and the assumption baked into the market is that nobody is going to let it run all the way to two hundred dollars a barrel. That assumption could turn out to be wrong. But it is a big part of why the price has not completely run away from us, even with the strait shut for three months.
And it is likely to last a while. The government's own energy forecasters do not expect shipping through that strait to get back to normal until early 2027. So do not budget like this is a bad couple of weeks. Budget like it could be sitting on your household through the rest of this year and into the next one.
Now you might be asking, can't the government just do something about the price right now? There is one tool they have, and it is called the Strategic Petroleum Reserve. That is a big emergency stockpile of oil the country keeps for exactly this kind of situation. The government can release some of it to put more oil into the market and take a little pressure off the price. The catch is that it is limited. It can soften a spike for a while, but it cannot replace a fifth of the world's oil month after month. It buys some time. It does not fix the problem. The only real fix is that strait opening back up.
Now, three things to watch.
The first one is going to surprise you. Watch the President's posts. And I am not being cute or clever here. Right now, the single biggest thing moving the oil price from one day to the next is not the generals, and it is not the oil companies. It is the President. Every time Trump puts out word that the war might be ending soon, or that a deal is close, the oil price drops, sometimes hard, in a single day. And every time things heat back up, it climbs right back. The entire market is hanging on his account. So if you wake up one morning and gas ticked down overnight, go look at what he posted. There is a good chance that is your answer.
The second thing to watch is the strait itself, and this is the real one. If those tankers start moving again, if the insurance comes back and the ships sail, prices come down across the board, on your gas and on your groceries both. The Navy has been involved in trying to protect that shipping, and the President has been pushing our allies to help keep those routes open. If that works, and the oil starts flowing again, you will feel it at the pump within weeks. If instead this week's new strikes turn into something bigger, it goes the other way, and fast. That twenty-two miles of water is the single most important thing to keep your eye on in this entire story.
The third thing is the bigger picture. Watch the nuclear standoff, and watch the leadership change inside Iran. The United Nations is demanding access to Iran's nuclear sites. Iran is in the middle of picking a new supreme leader. And the President has said he would meet with that new leader if it ends the war. If those pieces start moving toward a real deal, this whole thing could turn around faster than anybody expects. If they break down instead, it gets worse. Those are the levers that decide which way this goes.
Now here is where I come down on it.
For years we were told we were energy independent. That we did not need anybody. That the days of America being held hostage over a barrel of oil were behind us for good. And then a war breaks out next to Iran, and within a few weeks gas is up a dollar a gallon, groceries are climbing, and inflation is back over four percent. That ought to tell you something. It ought to tell you that energy is not just some economic side issue. Energy is national security. It always has been, and it always will be.
When we let our own production slide, when we drain our reserves, when we tie the price every working family in this country pays to a single twenty-two-mile gap of water on the far side of the planet that a regime like Iran's can choke off any time it feels like it, this right here is exactly the result you get. Ordinary families, people who had nothing to do with starting any of this, paying the bill for it every time they fill up the tank and every time they check out at the grocery store.
I am not going to stand here and tell you who to be mad at. You are grown adults, and you can do that math for yourselves. What I am going to tell you is this. Watch your own wallet. Watch that strait. And remember every politician and every talking head who looked you square in the eye and told you everything was under control while the number on the pump just kept right on climbing.
So that is the whole thing, start to finish. A war seven thousand miles away. A strait twenty-two miles wide. Insurance companies that pulled out, tankers stuck at anchor, eleven million barrels a day pulled off the market, and a world price that you and I do not get to opt out of. And at the very end of that long chain, a bill that lands right on your kitchen table.
Keep your eye on that strait. When it moves, your wallet moves. And I will keep you posted every step of the way.
That is everyone knows. The hard truth, the stuff nobody else will say, and the thing that keeps you going.
I am Brian Bullock of starborn studios. Find me on X at Everyoneknws1. If this hits you share it with someone who needs to hear it. Subscribe. leave a review. Come find us at brianbullockwriter.com
Because everyone knows. Your silence is your consent