Average U.S. gas prices rose to their highest level since the start of the Iran war, amid fears of a protracted energy crisis as Washington and Tehran appeared deadlocked over a proposal to reopen the Strait of Hormuz and end the two-month conflict.Gasoline prices hit an average of $4.18 a gallon on Tuesday, according to AAA data, reaching their highest level since the early days of the Russia-Ukraine war in 2022.The price spike comes as the White House appeared skeptical of an Iranian peace proposal that seeks to postpone discussion of Iran’s nuclear program, the Wall Street Journal and Associated Press reported. President Donald Trump has repeatedly said any agreement must include Iran giving up its uranium and agreeing to halt any future enrichment.
The latest proposal comes amid a fragile ceasefire and a U.S.-Iranian standoff on the water as both countries limit shipping in the Persian Gulf. World leaders have welcomed the break in hostilities but the Strait of Hormuz remains closed, keeping global energy prices elevated.
Christopher Cann
Christopher Cann
Average U.S. gas prices on Tuesday hit their highest level since 2022 as negotiations between the U.S. and Iran appeared stalled, raising fears of a protracted global energy crisis.
U.S. average gasoline price rose to $4.18 a gallon on Tuesday, according to AAA data.
National average retail gasoline prices have climbed about $1.19 a gallon, or about 40%, since the U.S. and Israel attacked Iran on Feb. 28.
Christopher Cann
Pentagon chief Pete Hegseth and Gen. Dan Caine, chairman of the Joint Chiefs of Staff, will appear before members of Congress later this week and face questions about the war in Iran.
The two will appear before the House Armed Service Committee on Wednesday and the Senate Armed Services Committee on Thursday.
They are likely to face questions about the two-month conflict, including the state of negotiations, the ongoing U.S. naval blockade and a timeline for the end of the war. The hearings come days after the Pentagon released President Donald Trump’s $1.5 billion defense budget request for fiscal year 2027, a 42% increase over the department’s spending from last year.
Andrea Riquier
Oil could trade much higher than current levels later this year, investment bank Goldman Sachs said in a report out Monday.
The bank’s commodities analysts raise their forecast for Brent crude for the fourth quarter of 2026 to $90, from $80. A barrel of Brent is currently trading at about $111, and most analysts expect that it will decline gradually over the course of the year as the war is resolved.
But it’s also possible for a “persistent reduction” in production, the analysts wrote. In that case, Brent could trade at $120. They point to a possible “scarring” of production capacity in the Middle East and investor concern about future supply disruptions from the area as a result of the war.
At its current levels, oil is about 60% higher than before the war began. That’s led to a corresponding increase in gas prices. A gallon of regular unleaded averaged $4.178 on April 28 nationwide, GasBuddy said.
Bart Jansen
Secretary of State Marco Rubio told Fox News that Iran’s threats against shipping in the Strait of Hormuz is “the equivalent of an economic nuclear weapon” hindering shipping for 20% of the world’s oil and natural gas.
Rubio billboards around Tehran brag about holding the world’s energy hostage.
“The strait is basically the equivalent of an economic nuclear weapon that they’re trying to use against the world,” Rubio said April 27, in an interview that continued to air April 28. “And they’re bragging about it.”
Rubio accused Iran’s leaders of seeking to export their revolution with the development of an actual nuclear weapon that the United States is trying to prevent.
“They don’t just seek to dominate Iran. They seek to dominate the region,” Rubio said of the sponsorship of groups such as Hezbollah and Hamas. “Imagine if the same people had a nuclear weapon. They would hold the whole region hostage.”
Bart Jansen
Secretary of State Marco Rubio told Fox News that it’s unclear whether Iran’s supreme leader, Mojtaba Khamenei, is still alive but the more important question is whether he is truly leading the country or is a figurehead for others.
Khamenei succeeded to the leadership post after his father was killed in the initial strikes of the U.S.-Israeli war on Feb. 28. But Rubio said there is some opposition in the country to hereditary leadership changes.
“The unresolved questions here are does he have same credibility as his father did?” Rubio said April 27, in an interview that continued to air April 28. “Does he have the clerical credentials to actually act as supreme leader? Is he actually making decisions or is there somebody standing in his stead who is basically controlling 90% of it and is making decisions on his behalf?
“We don’t know the answers to these questions,” Rubio said.
Christopher Cann
President Donald Trump on Tuesday said Iran had informed him of the country’s economic turmoil amid a U.S. naval blockade and wants to reopen the Strait of Hormuz.
“Iran has just informed us that they are in a ‘State of Collapse,'” Trump wrote on Truth Social. “They want us to ‘Open the Hormuz Strait,’ as soon as possible, as they try to figure out their leadership situation (Which I believe they will be able to do!).”
The U.S. blockade on Iranian ports and ships, which was a response to Iran’s tightening grip on the Strait of Hormuz, costs the Middle Eastern country about $400 million per day, according to analysts.
Over the weekend, Trump canceled a second round of in-person negotiations in Pakistan. The president cited fractures in the Iranian government and said a proposal from the country didn’t meet U.S. expectations.
“We’re not going to spend 15 hours in airplanes all the time, going back and forth, to be given a document that was not good enough,” he told Fox News.
Christopher Cann
The Israeli military on Tuesday ordered more people to evacuate form southern Lebanon amid a ceasefire that has failed to halt hostilities between Israel and Iran-backed Hezbollah.
The warning, which signals an imminent attack, went to residents in more than a dozen towns and villages in southern Lebanon, Reuters reported. The warning said the military action was necessary and blamed Hezbollah for violating a ceasefire agreement with Israel.
Reuters
The United Arab Emirates said on Tuesday it was quitting OPEC and OPEC+, dealing a heavy blow to the oil exporting groups and their de facto leader, Saudi Arabia, at a time when the Iran war has caused a historic energy shock and unsettled the global economy.
The loss of the UAE, a longstanding OPEC member, could create disarray and weaken the group, which has usually sought to show a united front despite internal disagreements over a range of issues from geopolitics to production quotas.
UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters the decision was taken after a careful look at the regional power’s energy strategies.
Asked whether the UAE consulted with Saudi Arabia, he said the UAE did not raise the issue with any other country.
OPEC Gulf producers have already been struggling to ship exports through the Strait of Hormuz, a chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas normally passes, because of Iranian threats and attacks against vessels.
Mazrouei said the move would not have a huge impact on the market because of the situation in the strait.
But the UAE exit from OPEC represents a win for U.S. President Donald Trump, who has accused the orgnization of “ripping off the rest of the world” by inflating oil prices.
Andrea Riquier
Brent crude oil added nearly 4% to trade at $112 a barrel, while gas prices also rose. With a gallon of unleaded costing, on average, $4.164 nationwide, prices are more than $1 above last year’s average.
Bond yields rose as their prices fell, meanwhile, with the 10-year U.S. Treasury note up about 3 basis points to 4.378%, the highest in about a month.
As energy prices stay higher for longer, investors increasingly expect inflation to bubble up as well. Bonds are selling off because higher prices in the economy erode the value of fixed income.
Even as President Donald Trump’s pick to chair the Federal Reserve passed one hurdle on the way to confirmation over the weekend, traders see very little chance the central bank will cut rates this year. Trump’s nominee, Kevin Warsh, was chosen because the president believes he’ll be more amenable to cutting borrowing costs. But the CME Group FedWatch Tool shows an 82% chance that rates will be unchanged by the final monetary policy meeting of the year.
Michael Loria
Israeli Air Force officials announced Monday they were leveling strikes on the “infrastructure of the terrorist organization Hezbollah” in southern Lebanon.
The Air Force’s announcement comes nearly two weeks after Israel and Lebanon announced a ceasefire but fighting between the two sides has continued in southern parts of the country bordering Israel.
Prime Minister Benjamin Netanyahu defended the continuing attacks in remarks Monday to Israeli Defense Forces: “We have the freedom of action to thwart immediate and emerging threats.”
The prime minister said attacks in southern Lebanon as well as north of the Litani River were in accordance with the ceasefire agreement with Lebanon approved by the United States.
USA TODAY has reached out to the State Department for comment.