Gas Prices Top $4 Per Gallon as US-Iran Conflict Disrupts Hormuz Shipping

The average U.S. gasoline price rose above $4 a gallon on Monday as fighting between the United States and Iran continued to restrict oil shipments through the Strait of Hormuz.The nationwide average price of regular gasoline reached $4.003 a gallon, according to the American Automobile Association (AAA), after standing just below the politically sensitive threshold on Sunday.“Instability along the Strait of Hormuz is contributing to the increase at the pump,” AAA said in a recent note.The last time the national average stood at $4 or higher was June 17, when it was about $4.02 a gallon.Brent crude futures were down 16 cents, or 0.2 percent, at $87.94 a barrel by 5:22 a.m. ET after hitting $91.42, their highest level since June 11.U.S. West Texas Intermediate crude fell 68 cents, or 0.8 percent, to $81.81 a barrel after reaching $85.39, its highest level since June 12.The benchmarks had initially extended last week’s sharp gains as escalating fighting further curtailed tanker traffic through the Strait of Hormuz. Brent rose 15.9 percent last week, its biggest weekly advance since April, while WTI gained 15.5 percent, its largest weekly increase since early March.The U.S. military said early Monday that it had completed a ninth consecutive night of strikes against Iran, and Tehran reported fresh attacks across the region, intensifying concerns that prolonged disruption in the Strait of Hormuz could remove significant volumes of oil and natural gas from the global market.“With little sign of de-escalation in the Middle East, oil prices continue to move higher as vessel flows essentially grind to a halt,” ING commodities strategists Warren Patterson and Ewa Manthey said in a July 20 note.The analysts said data from the London Stock Exchange Group (LSEG) showed only two outbound oil tankers were visible transiting the strait in the latest readings, with no inbound traffic.The intensified fighting in the Middle East dampened investor sentiment in Asia and Europe, where equities were broadly under pressure, though Wall Street futures pointed to a higher open amid expectations of strong corporate earnings.“Following the latest escalation in the US–Iran conflict before the weekend, with no clear signs of de-escalation, risk-off sentiment is likely to persist this week,” ING analyst Frantisek Taborsky wrote in a Monday note.Hormuz Shipping in CrosshairsThe Strait of Hormuz, a critical chokepoint for oil and liquefied natural gas exports from the Persian Gulf, has become a hotspot amid the U.S.–Iran conflict.The Islamic Revolutionary Guard Corps (IRGC) said on Monday that two oil tankers had exploded and been immobilized after attempting to transit what Iran described as an unsafe southern route through the strait. The Epoch Times could not independently verify the claim.The United States and Iran have clashed repeatedly over the Strait of Hormuz, with Tehran seeking to assert its control over the waterway.Iranian forces have attacked ships trying to sail through the U.S. Navy-supported southern route along the Omani coast, in a bid to force vessels to transit through the IRGC-controlled northern passage.The U.S. military, meanwhile, recently re-imposed its blockade of Iranian ships and ports in the Gulf, later announcing it had turned back several ships trying to bypass it, and while disabling a third by firing Hellfire missiles into the vessel’s smokestack.Iran’s foreign ministry spokesman told a press briefing on Monday that Tehran remains focused on asserting control over Hormuz, with its forces determined to implement any measures necessary to prevent any “misuse” of the strait in a way that would threaten Iran’s national interests, according to Iranian state-run media IRNA.Despite the uptick in hostilities, both sides have said that talks continue in a parallel effort to settle the conflict diplomatically.‘Delicate Diplomatic Dance’White House press secretary Karoline Leavitt told reporters on July 16 that Iran “very much continues” to talk to the United States and express interest in a peace deal.Baghaei confirmed on Monday that Tehran had received proposals from several mediators seeking to ease tensions with the United States, while responding to reporters’ questions about Qatar’s new initiatives, including a possible 10-day ceasefire.Baqaei said that diplomatic efforts were continuing alongside Iran’s military response, with mediators working to prevent further escalation.“The proposals put forward through mediators have been conveyed to us, and we have received them,” he said. “However, I would rather not go into their details at this stage.”In a recent interview on the Joe Rogan podcast, Vice President JD Vance described the challenges of the diplomatic track as partly due to divisions within Iran’s regime between hardliners and moderate officials more willing to compromise.“What we’re doing is a delicate diplomatic dance where we’re using economic leverage points,” Vance said.“We’re using carrots and sticks. We’re trying to talk to the pragmatists. And then, of course, when they commit acts of violence, we’re responding to it. And all those things are happening simultaneously to get us on a better trajectory.”While Vance said it’s impossible to predict whether diplomacy would ultimately prevail, he expressed guarded optimism that the process was heading in the right direction, with some exchanges of fire taking place and Hormuz restricted but open enough “to prevent a worldwide energy crisis.”“I don’t know exactly where this is going to go. But I think fundamentally we are on the right trajectory,” Vance said.“It’s just going to be really messy, and there’s going to be a lot of stops and starts.”Reuters contributed to this report.