US gas prices jump as Strait of Hormuz dispute escalates between US and Iran

Strait of Hormuz: Open or Closed?

Shortly after the outbreak of war between the U.S. and Iran in February, Iran blocked the Strait of Hormuz — a critical waterway for global energy trade — sending oil prices soaring worldwide. Many of the negotiations, ceasefires, and memoranda of understanding in the months since have aimed, at least from the U.S. side, at reopening the strait.

Following a weekend in which both sides exchanged fire, putting an already fragile peace in doubt, there is now no agreement between the parties on whether the Strait is open or closed.

The mid-June Memorandum of Understanding established a 60-day window for the sides to reach a more permanent agreement. However, according to The Washington Post, Iran now says the deal is in a "crisis phase."

"Interpretation against the text is not permissible," Iranian Foreign Ministry spokesman Esmaeil Baqaei said this week, referring to the June memorandum. "Lying has become part of the U.S. administration's behavioral pattern, and they have become addicted to it."

The Post also reported that U.S. officials said at the start of the weekend that Iranian negotiators had told them recent attacks on ships in the Strait were "carried out by a faction that sought to undermine the deal." By the end of the weekend, however, Supreme Leader Ayatollah Mojtaba Khamenei issued a statement vowing "revenge" against the U.S. and Israel.

'The Guardian of the Hormuz Strait'

On Monday, President Trump reiterated on Truth Social that the U.S. considers the Strait open and added a new demand:

"The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran. We are reinstating THE IRANIAN BLOCKADE, so named because it is only stopping Iran's ships or customers from entering or leaving. All other countries will have fair and open use of the Strait."

He went on to declare the United States "THE GUARDIAN OF THE HORMUZ STRAIT," adding that the U.S. "will be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World… The process and formation will begin immediately."

How such a new regime will be enforced remains unclear. Meanwhile, talks have been taking place in Oman, as recently as Saturday.

Gas Prices Rise Again

The initial outbreak of war and the closure of the Strait of Hormuz caused oil prices to spike, leading to pain at the pump for Americans and quickly making the war unpopular. This followed a 2024 campaign in which Trump campaigned against inflation and promised lower prices, while frequently criticizing the gas price surges that followed Russia's invasion of Ukraine during Joe Biden's presidency.

Since the mid-June agreement, U.S. gas prices had begun to fall, dropping back below the $4-per-gallon mark. However, recent uncertainty has driven oil and gas prices higher again.

GasBuddy reported on Monday that gas prices surged 10.3 cents per gallon in the last week to $3.82 per gallon — the first weekly gain since May, after eight consecutive weeks of decline. The site predicted further increases could follow.

"The turnaround comes as oil prices have surged following the collapse of the ceasefire between the U.S. and Iran and the start of new attacks, with oil jumping another 4% in Sunday evening trading, an ominous sign that could bring additional gas and diesel price increases in the week ahead," said Patrick De Haan, head of petroleum analysis at GasBuddy.

"While the pace of increases doesn't yet appear likely to match what motorists experienced in March and April, fresh Ukrainian attacks on additional Russian refineries will only add to the pressure, keeping supplies of refined products tight even as the situation remains fluid."

About the Author: Stephen Silver is an award-winning journalist, essayist, and film critic, and a contributor to the Philadelphia Inquirer.