The United States is the world's largest crude oil producer, so why are gasoline prices soaring due to Middle East conflicts?

Source: Huitong Network

The United States has become the world’s largest oil producer, and this status has been maintained for many years. In recent months, U.S. oil production has remained stable at over 13.6 million barrels per day. However, many still wonder: why does a conflict occurring on the other side of the globe in the Middle East lead to a significant spike in gasoline prices in the United States? The primary reason is that crude oil prices hold the largest weight in the composition of U.S. gasoline prices. Since the outbreak of the Middle East war, international crude oil prices have risen significantly over the past three weeks. Furthermore, although U.S. oil production is at a historical high, the daily oil consumption in the U.S. still exceeds 20 million barrels, far above domestic production.

Moreover, U.S. refineries are designed to process heavier crude oil, while domestically produced light shale oil does not fully match this requirement, necessitating substantial imports of heavy crude oil.

In other words, even though the United States is the world’s leading oil producer by a wide margin, its gasoline prices remain highly dependent on international crude oil prices. Once international oil prices soar, gasoline prices in the U.S. are bound to rise as well.

Crude oil prices account for more than half of U.S. gasoline prices.

According to data from the U.S. Energy Information Administration (EIA), in January 2026, the national average retail price for gasoline in the U.S. was $2.81 per gallon, with crude oil costs making up 51% of this. As March approaches, this weight has not changed, but with crude oil prices having risen about 30%, the current gasoline price per gallon has increased by more than $1 compared to before the outbreak of the Iran war.

The benchmark U.S. WTI crude oil price surged from about $67 per barrel before the first attack on Iran on February 27 to $99 per barrel in early trading this Monday. The international benchmark Brent crude oil saw an even larger increase, rising from $73 per barrel before the war broke out to $112 per barrel in early trading this Monday.

Taxes account for 18% of gasoline prices, and even if state and federal governments consider reducing fuel taxes, their impact on the final gasoline price is far less than the shock caused by soaring crude oil prices.

A month ago, the national average gasoline price was $2.929 per gallon.

Now, the national average price has exceeded $3.90 and is expected to breach the $4 mark within hours. This substantial increase is primarily due to the surge in crude oil prices. Currently, the world’s most important oil chokepoint—the Strait of Hormuz—remains closed, leading to over 15% of global oil transportation being disrupted. This directly raises the price of heavy crude oil available globally.

According to GasBuddy data, only 0.7% of gas stations across the U.S. had gasoline prices below $3 per gallon on Sunday, while this figure was as high as 78% three weeks ago.

GasBuddy’s head of petroleum analysis, Patrick De Haan, stated that the national average price has reached $3.94 per gallon and is expected to surpass $4 within 48 hours.

Not all crude oil is the same.

Although the U.S. is a net exporter of oil, its refineries still need to import a large amount of heavy crude oil because domestic shale oil is mostly light crude oil and cannot fully meet refinery demands. According to EIA data, crude oil imports account for about three-quarters of the total U.S. oil imports. Nearly 70% of U.S. refining capacity is most efficient at processing heavy crude oil. Therefore, the American Fuel and Petrochemical Manufacturers (AFPM) indicates that 90% of the crude oil imported by the U.S. is heavier than the domestically produced shale oil.

Even though the U.S. is the world’s largest crude oil producer, its refining market and fuel prices are not isolated; rather, they are deeply embedded in the global crude oil pricing system. Since the outbreak of the Iran war, international crude oil prices have surged, making it difficult for domestic gasoline prices to remain unaffected.

Overall, while the U.S. boasts the highest crude oil production in the world, due to its refining structure, consumption scale, and reliance on international markets, domestic gasoline prices will continue to fluctuate dramatically with global oil prices. The ongoing closure of the Strait of Hormuz is making this connection particularly direct and severe.

U.S. unleaded gasoline continuous daily chart Source: Yi Huitong

As of March 24, 15:12 Beijing time, U.S. unleaded gasoline continuous reports $3.0390 per gallon.