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What Gas Prices Could Look Like by May Thanks to the Iran Attacks

Published April 2024

If you’ve been to the gas station recently, you know prices are a wild ride. Over the past few years, it feels like every time there’s trouble in the Middle East, the pump prices jump. The latest attacks on Iran are no different—they’ve already shaken up the global oil markets. So if you’ve got spring or summer road trips on your calendar, it’s a good idea to get a handle on what might be coming at the pump.

Here’s the bottom line: while no one can predict exact numbers, most signs point to gas prices going up by May. The attacks on Iran have thrown a wrench in the global oil supply chain. Iran isn’t just some regional player—it’s a big oil producer and sits near key shipping lanes that keep the world’s crude flowing. When conflict flares up there, oil traders panic, betting on supply hiccups, and that means prices rise quickly.

Right now, in early April, the average price of gas in the U.S. is hovering around $3.50 a gallon. But after the news broke, futures markets jumped, pricing in the risk. If you’ve watched oil prices before, this pattern isn’t new: even a hint of disruption can tack on 20 to 30 cents per gallon pretty fast. If things get worse or drag on, national averages could push closer to $4.00, with some states—like California, Hawaii, and New York—possibly hitting $4.50 or more.

Why such a steep jump? Oil is traded globally, not just in the U.S. When Iran’s exports are threatened or shipping through the Strait of Hormuz gets risky, traders add a “risk premium” to oil prices. It’s not just speculation—history shows every flare-up in the Middle East nudges prices up by at least 10%, and that cost ends up coming out of your wallet at the pump.

You might think the U.S. should be somewhat insulated, thanks to the shale boom making us one of the world’s top oil producers. But the truth is, we still import a lot of crude, especially the types that our refineries are set up to handle. So even with more domestic production, we’re still tied to global price swings. When Brent crude rises, so does WTI, and yes, gas prices follow suit.

Let’s talk numbers. If crude oil jumps from around $85 to $100 a barrel because of these attacks and added risk, you can expect about a 40-50 cent increase per gallon at the pump. This isn’t just theoretical—whenever there’s a threat to supply, we see this kind of increase in a matter of weeks.

Of course, there are some curveballs. The Biden administration has tapped into the Strategic Petroleum Reserve (SPR) before to ease price spikes. That can help in the short term, but it’s really just a temporary fix. The SPR isn’t infinite, and relying on it too much might actually backfire if traders start worrying about running low on reserves.

Not everyone will feel this equally. Coastal states, especially on the West Coast, usually see higher prices because of stricter environmental rules and supply chain quirks. The Midwest might see a smaller bump, but it’s rare for any part of the country to be completely shielded. So don’t just look at the national average—it doesn’t tell the whole story.

Here’s a silver lining: if tensions cool down quickly and oil production isn’t seriously disrupted, prices could stabilize or even drop. We saw something similar in 2022 after Russia invaded Ukraine—prices spiked but then softened as markets adjusted and alternative supplies kicked in. Oil markets are fast-moving and reactive, sometimes calming down just as fast as they heat up.

Consumer demand also plays a key role. If people drive less because prices are high or the economy slows, refineries might cut back, leading to steadier or even lower prices. Remember during the pandemic when demand crashed and oil prices even briefly went negative? That was wild—but with summer travel and people eager to hit the road again, demand is likely to keep prices elevated at least for now.

So what should you do? Don’t panic, but don’t ignore the risks either. If you run a business with a fleet or have a long commute, now might be a good time to lock in fuel contracts or look into hedging strategies if that’s an option. For most of us, that’s not possible, but you can still fill up ahead of any big jumps, carpool more, or take public transit when you can. Every little bit helps when prices climb.

Looking ahead, the bigger picture is that as long as there’s tension in oil-producing regions, gas prices will stay unpredictable. The best you can do is stay informed, keep an eye on market moves, and don’t get caught off guard at the pump. Plenty of people assume prices will hold steady and end up surprised.

For investors, energy stocks and oil ETFs usually get a boost during these kinds of crises, but timing is tricky. If peace breaks out, those gains can vanish just as fast. My advice? Don’t go all in on a single trend, but don’t ignore the opportunity either.

To wrap it up: by May, expect gas prices nationwide to hover around $4.00 per gallon, maybe more if the Iran situation worsens. It’s not a done deal—things could improve—but the risks are real. Keep your eyes open, plan ahead, and remember that when it comes to gas prices, change is the only constant.

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