The United States is the world’s largest producer of oil, but here’s why Americans are paying higher prices during the Iran War

Gas prices across the United States have risen sharply since the Iran war began. On April 6, 2026, the AAA National Average gas price had climbed to $4.119 a gallon. As recently as February, it was below $3 per gallon.  Diesel prices crossed $5 a gallon, a level not seen since late 2022. In California and Hawaii, you will have to spend $7.685 and $6.817, for a gallon of diesel. 

Rising oil prices are also pushing up the cost of jet fuel, which is causing airlines to raise their fares. A Deutsche Bank analysis found that average domestic airfares for flights booked later in March increased between 15% and 124%. Transcontinental flights saw jumps of over 100%, and trips to the Caribbean, Florida, and transatlantic destinations are also costing significantly more.

According to CBS News, the U.S. produced roughly 13 million barrels of crude oil per day as of 2023, according to the Energy Information Administration, making it the world’s largest oil producer. Russia and Saudi Arabia, the second and third largest producers, each produce around 10 million barrels per day. Yet despite this, American consumers are still paying more at the pump.

The U.S. oil market is deeply tied to global prices, regardless of how much the country produces

The U.S. exports about 11 million barrels of its daily oil output while also importing roughly 8 million barrels, making it both a major exporter and the world’s biggest oil consumer. Bernard Yaros, lead U.S. economist at Oxford Economics, explained it plainly: “The global market sets the price. The provenance of the oil we’re filling our gas tanks with doesn’t matter.”

A key part of the problem is the type of oil the U.S. produces versus what its refineries are built to process. Most U.S.-produced oil is “light” crude, but the country’s refineries are set up to handle “heavy” crude. Ernest Moniz, former U.S. Secretary of Energy and now an energy researcher at MIT, noted that U.S. refineries cannot be quickly or easily reconfigured to handle lighter, low-sulfur grades of oil.

Willy Shih, a supply-chain expert and professor at Harvard Business School, added that refineries along the Gulf Coast in Texas are “geared toward handling a particular type of crude oil from Venezuela.” The American Fuel & Petrochemical Manufacturers estimates that re-tooling refineries to process only U.S. oil would “cost billions” and take “decades to permit, construct and eventually pay off.” 

This means U.S. refineries still need to import heavy crude even when domestic light crude is abundant. As Moniz put it, “If the price of oil goes up, the price of everything goes up,” adding, “Even though we are a net exporter of oil, that doesn’t change the fact that we are a major importer as well.” 

So when global oil prices rise, American consumers feel it directly at the pump. For a closer look at how gas and diesel prices are hitting drivers, the numbers are especially painful for those who rely on diesel. The conflict in Iran, which began on February 28, 2026, with joint U.S.-Israel attacks, has added major pressure to global oil markets. 

Iran retaliated by taking control of the Strait of Hormuz, a narrow but critical waterway between Iran and Oman that leads into the Arabian Sea, and is now requiring foreign oil tankers to get permission from Iran before passing through.

In 2024, around 20 million barrels of oil passed through the Strait daily, representing about 20% of the world’s liquid petroleum consumption, as per ABC News. Incidents in the region have been escalating. On March 11, 2026, smoke was seen rising from the Thai bulk carrier ‘Mayuree Naree’ near the Strait after an attack, and Iran has claimed responsibility for attacking oil tankers in the Persian Gulf.

President Donald Trump told reporters on March 15, 2026, that the Strait is “something that we don’t need,” and on April 1, 2026, stated, “The United States imports almost no oil through the Hormuz Strait and won’t be taking any in the future.” 

However, Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth, pointed out that this does not shield American consumers: “The price of oil is determined by global supply dynamics. So, whether the U.S. is an importer or an exporter, or regardless of what comes through the Strait that’s shut down, the price of oil is still set by global supply and demand.” 

The conflict has pushed crude oil prices up 45% to just over $100 a barrel, with Brent crude rising over 7% to more than $108 a barrel and the U.S. benchmark also rising 7% to about $107 a barrel. Trump’s comments about Iran’s oil have also played a role; his remarks sending global oil markets into chaos contributed to prices soaring to new highs.

Ramanan Krishnamoorti, a professor of petroleum engineering at the University of Houston, warned that “if this continues for another two or three weeks, we’re going to see shortages in places like Europe, India and China.” 

There are also concerns about Iran potentially imposing a toll of around $2 million per tanker passing through the Strait, which could amount to about $20 million a day. President Trump said on April 1, 2026, “When this conflict is over, the strait will open up naturally. It will just open up naturally.