Inflation pressure "off the charts"! Nationwide gasoline prices have surged 40% in two months to $4.17 per gallon, hitting a four-year high.

The conflict in the Middle East continues to escalate, coupled with the UAE announcing its withdrawal from OPEC. U.S. gasoline prices have hit their highest level in four years, and the energy market faces multiple pressures.

On April 28, GasBuddy analyst Patrick de Haan posted on the X platform stating, the national average gasoline price reached $4.17 per gallon, the highest since 2022, surpassing the previous record of $4.16 set earlier this month, and expects prices to keep rising. According to the American Automobile Association (AAA), the average price for regular gasoline is slightly above $4.17, up 6 cents from the previous day; diesel prices have risen to $5.46 per gallon.

Although Trump optimistically predicted in mid-April that oil prices "will drop significantly" and will be "much lower" before the midterm elections, on April 26 he publicly escalated his threat: Iran's oil wells will start a destructive process within three days, and if they "explode," Iran will never be able to restore its original production capacity. According to Xinhua, Trump has notified his aides to prepare for a long-term blockade of Iran.

The surge in oil prices directly impacts consumer spending and intensifies market concerns about inflation prospects. However, with the situation in Iran still unclear and the Strait of Hormuz remaining tense, there is significant uncertainty as to whether the market can see substantial relief in the short term.

Middle East conflict compounded by UAE’s withdrawal from OPEC, upward pressure on oil prices intensifies

The direct trigger for this round of oil price increases is the disruption of traffic in the Strait of Hormuz caused by the Middle East conflict. According to AAA data, on February 26—two days before the Middle East conflict broke out—the national average gasoline price in the U.S. was about $2.98 per gallon. Since then, shipping in the strait has been continuously obstructed, and global oil supplies have been affected, driving oil prices higher.

The Strait of Hormuz is a strategic passageway between Iran and Oman, through which about one fifth of the world's crude oil and liquefied natural gas is transported. The export vessels of OPEC Gulf oil-producing countries have been blocked, and while the Trump administration continues maritime blockade of Iranian ports, it maintains pressure to reopen the strait.

The trend in oil prices has also been influenced by another major variable. On April 28, the UAE announced its withdrawal from OPEC, further stirring up the global energy market. UAE Energy Minister Suhail Mohamed al-Mazrouei said the decision was made after reviewing the country's energy strategy and was not communicated with any other country in advance.

The UAE's withdrawal weakens OPEC's control over global oil supplies and will exacerbate its rift with Saudi Arabia. As the situation in the Strait of Hormuz has already obstructed exports from OPEC Gulf member states, this development makes the market’s supply outlook even more complicated.

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