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Economy & Trade

Why Gas Prices Are Still High After the US–Iran Weekend Pause and What the Houthis Have to Do With It

The national average gas prices has climbed back above $4 a gallon, driven by a sharp run-up in oil prices as conflict in the Middle East disrupts the world’s most important shipping routes. Here is what is behind the jump, how far it might go, and what it means for your budget. The Short Version…

By Tejanshu Jaluthria · (updated )

The national average gas prices has climbed back above $4 a gallon, driven by a sharp run-up in oil prices as conflict in the Middle East disrupts the world’s most important shipping routes. Here is what is behind the jump, how far it might go, and what it means for your budget.

The Short Version

  • The AAA national average for regular gas was about $4.11 a gallon in late July 2026, up roughly 15 cents in a single week and around 20% higher than a year ago.
  • The cause is oil, not gasoline itself. Crude prices surged this month as fighting between the United States, Israel and Iran disrupted the Strait of Hormuz and, more recently, Red Sea shipping.
  • Prices eased slightly at the very end of July after the US and Iran paused strikes and diplomatic talks resumed, but the situation remains volatile.
  • Where you live matters enormously: pump prices range from about $3 a gallon in the cheapest states to well over $5 in the most expensive.

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What Is Driving the Jump

Almost every big move in gas prices starts with crude oil, and crude oil this summer has been driven by one thing above all: the conflict centered on Iran.

Oil is a global market, and traders price in risk. When the fighting between the United States, Israel and Iran reignited in July after a brief diplomatic pause, attention turned immediately to the Strait of Hormuz, the narrow passage at the mouth of the Persian Gulf through which a large share of the world’s seaborne oil travels. Disruption there removes the confidence that supply will flow freely, and prices rise even before a single barrel is actually lost.

The pressure then widened. As tensions spread from Hormuz to the Red Sea, an increasingly important alternative route for Saudi crude exports, the risk premium grew. Over the month, benchmark oil prices climbed sharply, with the international benchmark, Brent crude, briefly topping $100 a barrel before easing.

Because it takes time for crude costs to reach the pump, gas prices tend to lag oil by a week or two. That is why the pump kept climbing into late July even as the underlying oil price started to wobble.

How High, How Fast

The pace of the increase has been the story. The AAA national average jumped about 15 cents in the week to 23 July, reaching roughly $4.09, and sat near $4.11 by 26 July. Most states were averaging $4 a gallon or more.

For context, this is still below the spring peak. The national average had reached about $4.56 on 21 May 2026 during an earlier phase of the conflict, then fell back to around $3.83 by the July 4 holiday before climbing again. So drivers have seen this movie before this year: a spike tied to Middle East escalation, relief when tensions cool, and a fresh climb when they flare.

Where you fill up changes the number dramatically. In late July the most expensive states were Hawaii, at around $5.45 a gallon, and California, near $5.40, both pushed higher by state taxes, environmental rules and distance from refineries. The cheapest were states such as Indiana, near $3.06 helped by a temporary suspension of most state gas taxes along with Texas and Oklahoma in the low $3.30s.

The Houthi wildcard

Over the weekend, Iran-aligned Houthi forces in Yemen claimed responsibility for strikes on facilities linked to Saudi Aramco at the Red Sea ports of Jizan and Yanbu, and separately targeted Saudi oil tankers. Earlier in the month the group announced a maritime blockade aimed at Saudi shipping through the Bab el-Mandeb Strait, the chokepoint linking the Red Sea to global markets.

The significance is that the Houthis are threatening the exact route Saudi Arabia was using to bypass Hormuz. With both the Persian Gulf and Red Sea outlets under pressure at once, traders are pricing in the risk that Saudi barrels can’t easily reach buyers by either path. Asian refiners have reportedly begun discussing rerouting Saudi crude the long way around Africa, which adds time and cost to every shipment.

Adding to the squeeze, the Caspian Pipeline Consortium suspended crude loadings at its Black Sea terminal after tanker attacks, disrupting a large share of Kazakhstan’s oil exports. Supply is being pinched from more than one direction at the same time.

President Trump has warned of what he called major military punishment against Iran and the Houthis over any further attacks on Red Sea shipping. How that threat plays out is one of the main variables for prices this week.

What Happens Next

This is where honesty matters more than prediction. Gas prices from here depend almost entirely on whether the conflict cools or escalates, and that can change within days.

Before the July flare-up, the US Energy Information Administration had expected prices to fall through the second half of the year. Its early-July outlook, prepared on the assumption that a June agreement to reopen the Strait of Hormuz would hold, forecast the national gas average to ease toward $3.80 a gallon over the third quarter. That forecast now looks optimistic, because it was completed before fighting resumed. Any official projection made before late July should be read with that timing in mind.

The most recent signals cut both ways. Late in the month, the United States and Iran paused their strikes and negotiators, reportedly with Pakistani and Chinese involvement, worked to revive talks, which pulled oil prices down from their highs. At the same time, Iran-aligned Houthi forces in Yemen claimed attacks on Saudi oil facilities, a reminder that the risk to shipping has not gone away.

The practical takeaway: expect volatility rather than a clean direction. If diplomacy holds and shipping normalizes, pump prices should drift lower over several weeks. If the fighting widens again, another spike is likely.

Frequently Asked Questions

Why are gas prices rising right now? 

Because oil prices have surged. Conflict involving the United States, Israel and Iran has disrupted key oil shipping routes, chiefly the Strait of Hormuz and the Red Sea, and that risk pushes crude prices up. Gas follows crude with a short lag.

How much has gas gone up? 

The national average rose about 15 cents in a single week in late July 2026 to roughly $4.11 a gallon, around 20% higher than a year earlier. It remains below the spring 2026 peak of about $4.56.

Will gas prices come back down? 

They may, if the conflict cools and shipping returns to normal, which several forecasts expected before the July escalation. But if fighting widens, prices could rise again. The direction depends on the conflict more than on anything else right now.

Why is gas so much more expensive in some states? 

State taxes, environmental requirements and distance from refineries create big regional gaps. In late July, drivers in Hawaii and California paid well over $5 a gallon while several central states were near $3.

Does the president control gas prices? 

Only at the margins. US presidents can influence supply through decisions like releasing strategic reserves or changing policy, but pump prices are set mainly by the global oil market, refining capacity and local taxes, which no single official controls.