The Trump Administration’s war in Iran has proven that Americans are still vulnerable to shocks to Middle Eastern oil supplies, even though U.S. production is at a record high and the country has become one of the world’s largest oil exporters.

Since the U.S. and Israel started bombing the country on Feb. 28, Iran’s Islamic Revolutionary Guard Corps has worked to block the critical Strait of Hormuz, a narrow entry into the Persian Gulf through which a fifth of global oil and gas tanker traffic must pass. Global oil prices have hovered around $100 a barrel, briefly approaching a height of $120 per barrel on March 9, up from about $72 a barrel on Feb. 28. The price spike is tied to “the largest supply disruption in the history of the global oil market," according to the International Energy Agency.

This has already caused U.S. gasoline and diesel prices to rise. Average U.S. gasoline prices rose from $2.94 on Feb. 23 to $3.72 as of March 16, according to the U.S. Energy Information Administration. Average diesel prices shot up even more—rising more than $1 per gallon from $3.81 to $5.07 during that time.

“When a key piece of infrastructure, in this case, the Strait of Hormuz, is blocked, it has a ripple effect, not just on the United States, not just on the Middle East, but everyone, because every country is a consumer of oil,” said Patrick De Haan, head of petroleum analysis at gas price research firm GasBuddy.

The price spike comes even as the U.S. continues producing crude oil more rapidly than any country in history. The country’s production hit a record 13.6 million barrels per day in 2025 and is expected to continue producing that much in 2026, especially as higher oil prices create more incentives to drill. 

Even though U.S. oil production is sky-high, fuel prices are still rising in the U.S. because of the global oil price increase. Robert Kaufmann, an oil and gas expert and professor at Boston University, said that oil is bought and sold in a global market, where companies will sell at the highest price they can.

“Imagine the U.S. produced all its own crude oil, which we're pretty close to,” Kaufmann said. “Now imagine that the price of oil shoots up to $100 from $50. … Are U.S. oil companies going to sell U.S. customers crude oil at $50 a barrel when they can sell it overseas for $100 a barrel?”

The price increase means that U.S. oil companies are profiting by stepping in to replace supplies bottlenecked because of the war. U.S. oil producers ExxonMobil, Chevron, and Occidental have all seen their stock prices rise since the war began.  

U.S. liquified natural gas (LNG) companies are also benefitting. After attacks on its energy sites by Iran, Qatar, one of the world’s top LNG exporters, shut down its LNG production centers. American companies Venture Global and Cheniere, which operate LNG export terminals in Texas and Louisiana, both had their stock prices jump as they and other exporters step in to fill the gap of shipping LNG to regions in Europe and Asia dependent on imports.

The domestic U.S. natural gas market is significantly different from international oil and gas markets. Unlike with oil, the effects of the war on U.S. natural gas prices have been more muted. After coming down from a recent high in January of $7.72 per million BTU caused by a massive winter storm, prices in March have been in the $3.10-3.40 range and have not spiked because of the war. 

The U.S. has a “huge supply” of natural gas, said Ryan Kellogg, an environmental economics professor at the University of Chicago. The country currently has eight operating LNG terminals, which cannot increase their exports enough over the short term to raise natural gas prices in the U.S. Building new LNG terminals takes years.

“The volume of [natural gas] exports is not really materially increasing,” Kellogg said. “It might go up a bit … but if you think about the total disposition of gas produced in the United States, it's not really going to go up much.”

With oil, however, U.S. consumers are more vulnerable to global market shifts. Many refineries on the U.S. Gulf Coast are specifically geared to refine lower-quality foreign oil, which is cheaper than the “light, sweet” crude produced in the U.S. That gap between cheap crude oil and more expensive gasoline, diesel, and other refined products is called the “refinery margin,” said Kaufmann, the Boston University professor.

“That's why we're still importing oil, because financially, it still makes sense to do that for certain refineries,” Kaufmann said.

Trump, who campaigned on cutting gasoline prices in half and driving them down to below $2 a barrel, last week embraced higher gasoline prices. "The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money," Trump wrote on his social media platform.

While Trump did not explain who he meant by “we,” energy companies are the ones making a lot of money from high oil prices, while consumers are forced to pay more to fill up their tanks and buy goods that are tied to the energy market. On Sunday, analysts with Goldman Sachs projected that the war in Iran could reduce global economic growth by about 0.3 percent and increase global inflation by 0.5 to 0.6 percentage points.

Governments have scrambled to dampen the price shock citizens face. South Korea put in place a cap on gasoline prices, with the European Union and Japan considering similar measures. The Philippines and Pakistan shifted government workers to four-day work weeks, and Bangladesh allowed universities to close for the Eid-al-fitr holiday to save fuel. China has told refiners to stop shipping refined fuels like gasoline abroad.

The 32 countries that are part of the International Energy Agency agreed to release a record-breaking 400 million barrels of oil from their petroleum reserves, including 172 million barrels from the U.S. Strategic Petroleum Reserve. So far, the release does not seem to have affected energy prices.

How the price spike continues depends on the length of the war and the damage done to Middle Eastern oil infrastructure. Iran’s Islamic Revolutionary Guard Corps has said it will not allow “a litre of oil” through the Strait of Hormuz, with a spokesman warning to “expect oil at $200 a barrel,” according to Al Jazeera.

The Trump Administration has not been clear as to when the war could end. Trump initially said the war would be over in four to five weeks. Last week, Trump said the U.S. has “won” the war, but also said the same day that “we got to finish the job.”

In a statement Thursday read on state TV, the new supreme leader vowed to keep blocking the Strait of Hormuz and attacking countries in the Middle East that host U.S. bases. Last week, U.S. officials said Iran began laying underwater mines in the strait, and at least 16 tankers and other commercial vessels have been attacked as of March 12, according to the New York Times.