The worldwide oil supply chain continues to experience a volatile period in which oil prices are fluctuating weekly (or in some cases, daily). For the first two months of the Iran-U.S. conflict, rising oil prices were a problem for many reasons. Now, as the war drags on into May, there are new questions about where the U.S. – and the world – go from here regarding the oil market.
Rising gas prices are nothing new for U.S. consumers
By now, anyone who drives has realized something is amiss with gasoline prices in the U.S. and across the world. After all, average prices are up as high as 80% to 85% year-over-year when compared to May 2025. In just over two months, gasoline prices have sharply jumped without ever coming down and offering a reprieve.
Now, the national average price for a gallon of regular, unleaded gasoline has risen to around $3.75 per gallon. Locally, the average prices are even higher. Although prices have risen, drivers are still filling up as they drive to work, deliver goods, take vacations, and visit family and friends.
U.S. consumers should consider the possibility of gasoline shortages
Although the last two months has seemed pretty normal for U.S. drivers, the oil supply chain is entering a new phase. Now, the oil market is beginning to experience scarcity.
Even if Iran and the U.S. agree on terms to end the war, oil supplies will not return to normal immediately. In fact, getting oil back to where it was pre-war will be a monthslong, if not longer, process. Infrastructure is damaged, trade routes need to be re-established, and other factors need to be accounted for. For example, refinery capacity has to be worked back up to normal levels.
In the meantime, if a deal is reached, there could be a period of gasoline shortages – regionally and sporadically, in the U.S. As capacity slowly comes back online, and with petroleum reserves having been drawn down amid delayed oil shipments, shortages are a distinct possibility.
Diesel prices are skyrocketing again – affecting companies’ bottom lines
A few years ago, diesel prices were sky high due to the Russia-Ukraine war, capacity issues, weather-related disruptions, and more. Now, diesel prices have jumped back up in the first two quarters of 2026 as a result of the Iran-U.S. conflict.
When diesel prices rise, it acutely affects businesses of all sizes. Companies are forced to increase costs in order to perform basic tasks like truck delivery, shipping of goods, etc. as a result of higher diesel prices. In return, these costs are passed to consumers in the form of surcharges, higher prices, etc.
Even if consumer gasoline prices decrease, diesel prices are likely to remain higher for a longer period, as was the case back in 2022 when the Russia-Ukraine war started.
Higher gasoline prices could mean slower economic growth
One thing that is a sure thing is that when gasoline prices are higher, for a long period of time, economic activity is affected. Discretionary trips become more costly, which means more consumers stay home or focus on local activities. Although the U.S. economy continues to perform decently, a disturbed oil market globally means that economic pressures will continue to mount in the U.S.
Fuel prices have already disrupted airlines, and Spirit Airlines is the latest example of airlines being unable to cope with higher fuel prices and remain profitable.
