American drivers paid an average of $4.446 a gallon for regular gasoline on Sunday, up from $4.099 a week earlier, even as Brent crude held near $108.11 and a slimmed-down OPEC+ pledged to add 188,000 barrels a day in June. The pump price is the highest since late July 2022, according to AAA.
The gap between a flat tape and a rising retail price marks the point at which the two-month Iran war becomes a structural squeeze on consumers and developing-economy power grids. The 188,000-barrel-per-day hike is a sliver of the 14.5 million barrels per day that Goldman Sachs estimates the closure of the Strait of Hormuz and attacks on energy infrastructure have wiped from global supply. The International Energy Agency has called it the biggest energy disruption in history.
At the pump
U.S. gasoline averaged $2.98 a gallon on Feb. 26, two days before the war began, according to AAA. The Department of Energy released 17.5 million barrels of crude from the Strategic Petroleum Reserve between March 20 and April 24 to blunt the rise.
"When inventories are low and you can't get oil out of the ground or out of the strait, you should expect prices to keep rising at least until demand capitulates and starts to contract," Kevin Book, co-founder of ClearView Energy Partners, told NPR's Weekend Edition. He said peak pump prices may be weeks or months away.
On the markets
Brent futures for July stood at $108.11 as of 05:00 GMT Monday, down 0.06 percent, after President Trump announced "Project Freedom," a U.S. effort to "guide" stranded vessels out of the Gulf. Only 20 vessels crossed the strait on the most recent day for which Windward ship-tracking data was available, against an average of 129 daily transits before the war.
In Delhi
India, the world's third-largest carbon dioxide emitter, is leaning harder on coal as liquefied natural gas tightens and a heatwave pushes power demand higher. Coal-fired generation rose to 164.9 average gigawatts in April from 160.7 a year earlier, according to S&P Global Energy. About 60 percent of India's LNG imports move through Hormuz.
Higher LNG prices have made gas-fired generation economically unviable, said Girish Madan, director of corporate ratings at Fitch Ratings in Singapore. "So, coal-based power needs to share a higher burden in these peak summer months," he told CNBC.
Without UAE
Sunday's OPEC+ meeting was the cartel's first since the United Arab Emirates, its third-largest producer, formally departed on May 1. The seven remaining participants — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman — said the increase reflected a "collective commitment to support oil market stability." The June bump is smaller than May's 206,000-barrel-per-day addition.
"The market still appears to assume the Strait of Hormuz will start to open up within several weeks one way or another," said Saul Kavonic, head of energy research at MST Financial in Sydney. "The market may be underestimating how long the Strait could remain largely closed, and the scope for military escalations."
Even a settlement may not bring quick relief. Analysts cited by Al Jazeera said prices are likely to remain elevated after any peace deal because of the backlog of unloaded supplies, damaged infrastructure and the need to clear Iranian mines from the waterway.