The largest oil supply disruption in history: what the Iran war did to the price of gas, diesel and everything shipped

People and organizations

Donald Trump, Trump administration, Government of Iran, US military (Department of Defense)

Places

United States, Iran, Middle East, Saudi Arabia, Global

Evidence label

Estimate — A valuation, projection or model from a named party (for example Forbes, CBO, a committee staff) with its method and date. Partisan estimates are identified as such. More

What happened

At the start of 2026, US gasoline was under $3 a gallon and oil markets were worried about oversupply [1]. On February 28 the United States attacked Iran, and Iran closed the Strait of Hormuz, through which about a fifth of the world's oil moves [3]. The International Energy Agency called it the largest supply disruption in oil-market history [2]. Traffic fell more than 90 percent; more than 12 million barrels a day disappeared from the market at the peak; Iraq and Kuwait shut in production because their storage was full; Brent peaked near $138 [8][3]. The IEA coordinated a 400-million-barrel emergency release, the largest ever, and by mid-June those buffers were nearly gone [8].

Pump prices followed. Gasoline rose 48 cents in one week in early March, passed $4 within five weeks, and hit $4.48 on May 5, 50 percent above the pre-war level; some readings reached $4.60 [2][5]. The June ceasefire brought Brent back to $85 and EIA forecast relief [4]. Then the truce collapsed in July, the strait closed again with reserves depleted, and prices climbed back: on September 9, gasoline was $4.15 and diesel $5.90, up 59 percent year on year; by October 20 diesel was about $6.50, roughly 70 percent above February [7][6]. As of October 26, average gas prices during Trump's second term are higher than during Biden's, and 2026 has already set the record for days with gas at $4 or more [1].

Why it matters

Trump campaigned in 2024 on gas under $2 [1]. The war he launched without Congress did the opposite, and the mechanism was exactly what the pre-war analyses predicted: Hormuz carries a fifth of world oil, bypass pipelines cannot replace it, and the spare capacity sits inside the Gulf, so a closure is unmanageable [3][8].

Diesel is the deeper problem. It is 70 percent of the petroleum used in freight, construction and agriculture, which means it is priced into groceries, building materials and every delivered good [6]. J.P. Morgan estimates that sustained $10 diesel would cut 2027 US growth to near zero and make recession the base case [6]. The Strategic Petroleum Reserve, drawn down to fight prices, stood at about 283 million barrels on October 2, a 40-plus-year low, leaving less cushion for the next shock [6]. Fertilizer and food prices rose as gas supplies tightened; Iran's strikes destroyed two of Qatar's LNG trains, which will take three to five years to repair [8]. Airlines cut flights and raised fares as jet fuel spot prices rose 82 percent [7][5].

The shipping system itself has been rewired around Iranian control. Only about 20 percent of expected traffic crossed Hormuz in the war's first 172 days, much of it on "dark" routes with transponders off; insurance premiums rose from 0.25 percent of a vessel's value to 7.5 to 10 percent; tanker hire rose from $65,000 a day to $1.6 million; and Iran set up an authority to collect fees from ships using its route [9][1].

The evidence

• CNN's analysis of AAA data comparing administrations [1].
• The AP's May and September price reports with AAA and EIA figures [2][7].
• The Dallas Fed's March analysis of the supply shock and its historical comparison [3].
• EIA's July outlook after the brief reopening [4].
• The Tony Blair Institute's accounting of the first closure, the buffers and the second closure [8].
• J.P. Morgan's October diesel and inventory analysis [6].
• CNN's shipping-data visualization of Hormuz traffic and insurance costs [9].

Response and counterpoints

The administration says it is acting on prices through SPR releases, a Jones Act waiver, farm aid, Russian diesel and expanded refining capacity [1]. Some of the price increase reflects factors beyond Hormuz: damaged refineries in Russia and the Middle East, China holding back fuel exports, low inventories, and a refinery outage in Illinois that spiked Great Lakes prices [1]. The US blockade of Iranian ports, intended to pressure Tehran, also removed Iranian barrels from the market and pushed prices up [2]. EIA's July forecast showed that reopening the strait brings prices down quickly, which supports the argument that a deal, not supply policy, is the fix [4].

What remains uncertain

Bank of America's September view was that a durable deal before the midterms was increasingly unlikely and that oil could reach $95 to $120 if attacks continued, with spikes to $150 if major infrastructure were hit [7]. How long elevated prices persist after any reopening depends on shipping and insurance normalizing, which analysts said could take months [2]. The J.P. Morgan $10 diesel figure is a scenario, not a forecast [6].

Money and method

All retail prices are AAA national averages for regular gasoline and diesel on the dates given [2][7][1]. Brent and WTI figures are as reported by the cited sources; the Dallas Fed's $98 WTI is a model output, not an observed price [3]. The 2026 war's "largest disruption" characterization is the IEA's [2].

Sources cited

1. [1]
   Gas prices under Trump are now higher than under Biden — CNN, 2026-10-26.

   supports · Paragraphs 3-7 (CNN analysis of AAA data: average gas prices in Trump's second term now exceed Biden's; Trump promised gas under $2 in 2024; first-term average $2.47); paragraphs 13-22 (gas under $3 at start of 2026 with oversupply concerns; 2026 surpassed the Biden-era record for days at $4 or more; tanker hire from $65,000 to $1.6 million a day); paragraphs 11-12 (White House actions: $8 billion farm aid, SPR releases, Jones Act waiver) · checked 2026-10-26 · source N-oil-01
2. [2]
   Gasoline costs 50% more in the US than it did before the Iran war — Associated Press via KRGV, 2026-05-05.

   supports · Paragraphs 1-2 and 9 (May 5, 2026: regular gasoline $4.48, up 31 cents in a week and 50% since the war began; IEA: effective closure of Hormuz is the largest supply disruption in oil-market history; oil as high as $112); paragraphs 14-20 (US blockade of Iranian ports added upward pressure; even a lasting reopening could leave prices elevated for months) · checked 2026-10-26 · source N-oil-02
3. [3]
   What the closure of the Strait of Hormuz means for the global economy — Federal Reserve Bank of Dallas, 2026-03-20.

   supports · Opening section (conflict began Feb. 28, 2026; Hormuz closed; attacks on oil infrastructure in Saudi Arabia, Kuwait and UAE; Iraq and Kuwait curtailing production; a full halt removes close to one-fifth of global supply); model section (20% supply loss raises WTI to $98 and cuts global growth; 1973 and 1990 shocks removed a little over 6%) · checked 2026-10-26 · source N-oil-03
4. [4]
   EIA increases global oil production forecast after the opening of the Strait of Hormuz — US Energy Information Administration, 2026-07-07.

   supports · Paragraphs 1-3 and 'Crude oil price forecast' (July 7, 2026: EIA raises production forecast after the June 18 MoU; Brent averaged $85 in June, $32 below the April peak; gasoline $4.21 in Q2 and forecast $3.80 in Q3) · checked 2026-10-26 · source N-oil-04
5. [5]
   High Jet Fuel Premium Changing U.S. Refiners' Priority — American Action Forum, 2026-06-15.

   supports · 'The Global Oil Disruption' (Hormuz effectively closed for more than 100 days by mid-June; Brent ~$105 vs ~$70 before the conflict; China cut imports 30%); 'Higher crude oil prices' (Gulf Coast jet fuel spot up 82%; retail gasoline as high as $4.60 in May; US jet fuel production up as refiners chased margins) · checked 2026-10-26 · source N-oil-05
6. [6]
   The new oil crisis runs through diesel — J.P. Morgan Private Bank, 2026-10-20.

   supports · Opening paragraphs (Oct. 20, 2026: US diesel about $6.50 a gallon, about 70% above February; crude nearly $95); 'Diesel matters' (diesel is 70% of petroleum used in freight, construction and agriculture; $10 diesel could cut 2027 US growth to 0-0.5% and make recession the base case); 'Why oil could stay higher' (more than 500 million barrels of stored oil drawn down; SPR about 283 million barrels on Oct. 2, a 40-plus-year low) · checked 2026-10-26 · source N-oil-06
7. [7]
   Oil prices climb as US strikes Iranian tankers and Houthis hit Saudi facilities — Associated Press via The Boston Globe, 2026-09-09.

   supports · Paragraphs 2-4 (Sept. 9, 2026: US strikes five Iranian tankers; Houthi attacks ignite Saudi oil facilities; Brent $70 to $100 for March-May, $72-$102 in July); paragraphs 5-6 and 9-12 (Bank of America: durable deal before midterms unlikely; $95-$120 possible, spikes to $150 if infrastructure hit; AAA: gasoline $4.15, up 26% year on year; diesel $5.90, up 59%; airlines cut flights and raised fares) · checked 2026-10-26 · source N-oil-07
8. [8]
   Beyond Hormuz: Building Resilience for the Next Crisis — Tony Blair Institute for Global Change, 2026-07-31.

   supports · Executive summary and chapters 1-2 (Hormuz closed 15 weeks in early 2026, removing more than 12 million barrels a day at peak; Brent peaked near $138; IEA coordinated a 400-million-barrel release; buffers nearly depleted by mid-June; second closure began mid-July with depleted reserves; fertilizer and food prices rose; Ras Laffan LNG trains destroyed, three to five years to repair) · checked 2026-10-26 · source N-oil-08
9. [9]
   How traffic through the Strait of Hormuz is adapting to war — CNN, 2026-08-14.

   supports · 'How are ships passing' and timeline (about 100 vessels a day before the war; Iran mined the pre-war route April 9; 3,456 crossings in 172 days to Aug. 18, about 20% of expected; 1,572 on dark routes); 'Insurance' (premiums 7.5-10% of vessel value vs 0.25% before the war); 'Iranian control' (Iran's strait authority collecting fees, sanctioned by the US) · checked 2026-10-26 · source N-oil-09