U.S. gasoline prices are soaring, and Trump’s “Iran gamble” is beginning to pay the price.
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The U.S. military action against Iran is transmitting costs to ordinary American households via the most direct channel: oil prices. The rapid rise in gasoline prices not only shakes Trump's core political promise to suppress inflation, but also casts a shadow over his economic agenda as the midterm elections approach.
According to data from the American Automobile Association (AAA), the national average price for regular gasoline rose to $3.109 per gallon on Tuesday, not only above the level when the Biden administration left office, but also a significant jump from $2.951 a week ago. The pressure in the wholesale market is even more pronounced—RBOB futures have soared from about $2.30 at the end of last week to $2.50, suggesting further upside potential for retail prices.
Gulf Oil analyst Tom Kloza warned that "the events of the past 72 hours are highly inflationary," and expects gasoline prices to rise to $3.25 to $3.50 per gallon by Easter Sunday.
Diane Swonk, chief economist at KPMG US, stated bluntly that "with inflation having exceeded the Fed’s 2% target for five consecutive years, the addition of new price pressures at this time is worrying," and explicitly mentioned that the risk of stagflation is "not impossible."
Moreover, some analysts point out that the impact of rising oil prices has extended to the monetary policy level. As oil prices climb and inflationary pressure increases, the path to Fed rate cuts may be disrupted.
Political Pressure of Inflation Rises Sharply, Trump's Promise Faces Test
The direct trigger for this round of gasoline price increases is the joint U.S.-Israeli military strike against Iran and Tehran's subsequent counteraction, which has sparked expectations of global crude oil supply disruptions.
Tom Kloza further pointed out that if the conflict spreads to oil infrastructure in Saudi Arabia, Kuwait, and other areas, "it will introduce variables never seen before," suggesting the tail risks of the current situation go far beyond Iran itself.
Currently, gasoline prices across the U.S. vary significantly—ranging from $2.624 per gallon in Oklahoma to $4.674 per gallon in California. Although overall prices remain well below the historical peak of over $5 after the outbreak of the Russia-Ukraine conflict in 2022, the rapid upward trend alone is enough to raise market alarm.
Gasoline prices are among the most direct indicators of inflation perceived by the American public, and their rise poses a direct blow to Trump’s political position.
At present, Trump is trying to convince voters that he is capable of taming inflation—precisely the core issue pressuring his approval rating, and with only a few months left until the midterm elections that will determine whether the GOP can retain control of both chambers of Congress.
Ed Morse, senior adviser at Hartree Partners, pointed out that "40% of the economy is composed of those who have no savings and live week by week on wages and other income," and if oil prices rise to $3.50 to $4 a gallon, "it will inevitably impact a large population."
White House Press Secretary Karoline Leavitt responded that the government’s policies have pushed U.S. oil production to a record high and stated that the Department of Energy and Treasury "will continue to monitor oil price trends and do everything possible to maintain price stability." However, U.S. Energy Information Administration (EIA) data show that while U.S. oil output has improved slightly in the near term, it is expected to decline by 2026.
Energy Producers Benefit, But Wealth Effects Are Hardly Universal
Some analysts note that rising oil prices are not entirely negative for the U.S. economy—as one of the world’s largest energy exporters, U.S. energy producers will directly benefit from the price increase.
Jeff Currie, Chief Energy Strategist at Carlyle Group, said, "U.S. export volume is roughly equivalent to Saudi Arabia. Wouldn’t you want oil prices to go up? In the short term, consumers in Chicago will suffer, but once energy firms in Texas get richer, they’ll also spend."
However, the energy crisis triggered by the Russia-Ukraine conflict in 2022 provides a counterexample. According to a study published in September 2025, more than 50% of the excess profits from surging energy prices at that time ultimately flowed to the top 1% wealthiest Americans.
Gregor Semieniuk, a University of Massachusetts professor and co-author of the study, pointed out that "wealth distribution doesn’t change overnight"; shareholders of large U.S. oil companies will once again be best positioned to benefit, while ordinary households will bear the brunt of price pressures.
Interest Rate Expectations Under Pressure, Rate Cut Path May Be Disrupted
The impact of rising oil prices has already extended to the monetary policy level.
CME data show that, compared to before the U.S.-Israeli attack on Iran, the market’s expectation for more than two 25-basis-point rate cuts in the current year for the federal funds rate (currently at 3.5% to 3.75%) has significantly cooled.
Diane Swonk pointed out that as high oil prices arrive, tariff effects and the stickiness of inflation in the services sector have not dissipated. Multiple pressures overlapping further narrow the Fed’s policy space.
Analysis indicates that if the conflict lasts longer than Trump’s anticipated four to five weeks, elevated oil prices will directly block his political strategy to seek rate cuts before the midterm elections.
According to reports, Trump will meet with Treasury Secretary Besant and Energy Secretary White later Tuesday local time to discuss response plans.
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