Across the United States, the average cost of a gallon of regular gasoline has risen nearly 27 cents in a week, to $3.25, and American consumers are bracing for higher prices at the pump as the U.S.-Israel conflict with Iran threatens to disrupt global oil supplies.
That fear has also reached the White House, where Donald Trump’s chief of staff, Susie Wiles, is reportedly looking for ideas to lower gas prices and officials are being “yelled at” to bring good news, according to Politico.
War in oil-rich countries used to cause panic at American gas stations. Those fears have eased somewhat as the United States has become the world’s largest crude oil producer. And despite this week’s price increases, American consumers are somewhat insulated from the global energy shock. The supply cushion has its limits, but those limits are high: U.S. producers can ramp up production quickly if oil prices remain high, and the White House is under immense pressure to keep prices low as the conflict continues.
The United States is projected to pump a near-record 13.6 million barrels of crude oil per day in 2026, according to the U.S. Energy Information Administration (EIA). Saudi Arabia is the next largest producer with 9.87 million barrels, according to the International Energy Agency. Iran produces 3% of the world’s oil supply.
High American production means that American consumers may be partially insulated from energy shocks, although they are not completely immune.
Oil is a globally traded market and prices are influenced by global events. After the attacks by the United States and Israel, Iran effectively closed traffic through the Strait of Hormuz, a key area for shipping energy to Europe and Asia, through which about 20% of the world’s oil and natural gas flows.
After Trump announced Tuesday that the United States will provide insurance guarantees and naval escorts for oil tankers crossing the strait, oil prices fell from their highs. They rose on Friday, with Brent crude oil, the global benchmark, surging past $90 after Trump said there would be “no deal with Iran except an UNCONDITIONAL RESIGNATION.”
Higher US crude oil prices have already been reflected in pumping prices. Even if oil prices remained at current levels, Patrick De Haan, head of oil analysis at Gas Buddy, expects retail prices could gain another 20 to 25 cents per gallon, which could lift the national average to $3.40.
As difficult as it may be for American drivers to accept, Joseph Brusuelas, chief economist at RSM, a middle-market insurance, tax and consulting firm, said the resilience of the U.S. economy suggests that U.S. oil prices must reach $125 a barrel, or $4.25 a gallon for gasoline, to inflict economic damage.
“The U.S. economy is a dynamic, resilient, $30 trillion beast. It has a lot of room to maneuver here, in terms of how much pain it can absorb from oil prices and volatility across the energy complex,” Brusuelas said. “But even that $30 trillion beast has its weaknesses.”
If US oil prices rise to $125 a barrel, US gross domestic product (GDP) could fall by at least 0.8% and consumer inflation could rise as much as 4%, he said. Every $10 increase in the price of a barrel of oil can lead to a 0.1% drop in overall growth and a 0.2% rise in price levels.
The last time gas prices rose enough to force consumers to reduce spending was in June 2022, Brusuelas said, following the Russian invasion of Ukraine. At the time, U.S. gasoline prices averaged $5.01 a gallon.
Oil prices may not reach that level. Higher prices could prompt shale oil producers to increase production. Although the EIA forecast of 13.6 million barrels produced per day in the US is near a record, it remains largely unchanged from 2025 production.
“Recent history provides some comfort that this could happen,” Brusuelas said, referring to the U.S. response to oil crises after Russia invaded Ukraine.
The United States could increase production if the Strait of Hormuz remains closed. The United States has been a net energy exporter since 2019 and could expand oil production to meet demand, industry experts say, and would likely head to Europe. That could lower global oil prices.
But prices would have to stay above $70 a barrel for a while before shale oil producers would start considering increasing production, said Rob Thummel, senior portfolio manager at Tortoise Capital.
“They could gradually add half a million barrels a day, start with that and see what demand does, but there is potential for the United States to continue increasing shale production,” he said.
