The national gasoline average reached $4 for the first time since 2022. The Houthis have fired on Israel. The U.S. and Iran remain far apart on ceasefire terms. This is a status report on day 31 of the conflict.

The national average for a gallon of regular gasoline crossed $4 on March 31, according to AAA and GasBuddy, up from $2.97 before the war began on February 28. That is an increase of more than $1 per gallon in 31 days, a pace larger than the one-month spikes that followed Hurricane Katrina in 2005 and Russia’s invasion of Ukraine in 2022.

Five developments since my last post on March 26 are driving the current state of the crisis: the Houthis have entered the conflict and threatened a second oil chokepoint; Iran struck a U.S. military base, injuring 29 soldiers; oil reached $116 a barrel, its highest since mid-March; recession probability estimates have risen across major forecasters; and the U.S. and Iran remain publicly far apart on ceasefire terms ahead of Trump’s April 6 deadline.

National average price for a gallon of regular gasoline, Feb 26 – Mar 31, 2026. Source: AAA weekly data.

The Houthis Have Entered the War

On March 28, the Houthis fired missiles at Israel from Yemen, marking their entry into the active conflict. The development is significant for energy markets because the Houthis control the Bab al-Mandab Strait, the passage between Yemen and Djibouti at the southern end of the Red Sea. Saudi Arabia’s East-West Pipeline, which the kingdom has been using to bypass the Hormuz closure by routing crude to the Red Sea port of Yanbu, terminates in that corridor. During the 2023 and 2024 Houthi campaign against Red Sea shipping, major carriers including Maersk, Hapag-Lloyd, and CMA CGM suspended Trans-Suez sailings and rerouted around Africa’s Cape of Good Hope.

Military and Diplomatic Developments This Week

On March 27, an Iranian missile and drone strike on Prince Sultan Air Base in Saudi Arabia damaged several U.S. refueling aircraft and injured 29 American soldiers. An E-3 Sentry surveillance aircraft was also damaged in the attack. Brent crude rose to $114 that day, recovering the ground lost during Trump’s pause announcement the previous Monday.

By Monday, March 30, Brent reached $116 a barrel, its highest level since mid-March, after Iran’s parliament speaker warned that Tehran was prepared for a U.S. ground invasion. Japan’s Nikkei 225 and South Korea’s KOSPI both fell more than 4 percent. The S&P 500 closed the week approximately 9 percent below its January high, its fifth consecutive weekly loss, and the Dow Jones Industrial Average entered correction territory for the year.

On March 30, Treasury Secretary Bessent said the U.S. would gradually "take control" of the Strait of Hormuz. The Wall Street Journal reported the Pentagon is reviewing plans to send up to 10,000 additional ground troops to the region, which would bring total U.S. military presence to over 60,000. The USS Tripoli, carrying 2,500 Marines from the 31st Marine Expeditionary Unit, has arrived in the region. Elements of the 82nd Airborne are also en route.

Also on March 30, Trump posted on Truth Social that if a deal was not reached and the Strait was not reopened, the U.S. would "destroy all of Iran's power plants, oil wells, Kharg Island, and possibly all its desalination plants." Early on March 31, a Kuwaiti Very Large Crude Carrier, the Al Salmi, was struck by an Iranian attack while anchored at the Port of Dubai, causing a fire. The vessel was at full capacity and Kuwait Petroleum Corporation warned of a potential oil spill.

Ceasefire Positions Remain Far Apart

The U.S. 15-point ceasefire proposal, delivered to Iran via Pakistan on March 24, includes requirements that Iran dismantle its nuclear program, end uranium enrichment, hand over enriched uranium stockpiles, grant full IAEA access, limit its missile capabilities, end proxy support, and guarantee freedom of navigation through the Strait of Hormuz. Iranian officials have characterized the proposal as "maximalist" and "unreasonable" and have not formally engaged with it.

Iran's five-point counter-proposal, relayed through intermediaries, includes a permanent ceasefire, concrete guarantees against renewed conflict, war reparations, a comprehensive end to hostilities across all fronts including Lebanon, and international recognition of Iranian sovereignty over the Strait of Hormuz. Vice President Vance stated on March 28 and 29 that the war would continue "a little while longer" to ensure Iran was "neutered for a very, very long time", while Iran's Foreign Minister Araghchi has continued to characterize communications from Washington as "messages" rather than negotiations.

Trump extended his power-plant strike deadline to April 6, saying talks were "going very well." Iran has publicly denied that formal negotiations are taking place. A Pakistan-hosted meeting on March 29 including Egypt, Saudi Arabia, and Turkey discussed reopening the Strait, but produced no announced outcomes.

Economic Conditions as of March 31

Gasoline crossed $4 nationally today. Diesel, which carries broader economic weight because it powers freight transport, is approaching a national average of $5.40, up from $3.76 before the war. GasBuddy analyst Patrick De Haan projected on March 30 that diesel could reach $6 per gallon, and could set new records if conditions do not improve. California's average has reached $5.87 per gallon.

National average diesel and regular gasoline prices, Feb 28 – Mar 31, 2026. Diesel is up 44% vs. gasoline up 35% from pre-war levels. Source: AAA, Axios, Wolf Street, Fortune.

Urea prices are up 50 percent since the war began and ammonia is up 20 percent, according to Fortune, because the Persian Gulf accounts for roughly a third of global urea exports and a quarter of ammonia exports, with up to 40 percent of global nitrogen fertilizer trade passing through the Strait of Hormuz. These input cost increases are being locked into spring planting contracts and are expected to affect retail food prices in the third and fourth quarters of 2026.

The 10-year Treasury yield climbed to 4.46 percent last week and the 30-year fixed mortgage rate reached 6.38 percent, reversing several months of gradual decline. The OECD has revised its U.S. 2026 inflation forecast to 4.2 percent. Goldman Sachs raised its U.S. recession probability estimate to 30 percent; Moody's Analytics placed it near 50 percent. Goldman also revised its forecast for U.S. GDP growth in the second half of 2026 to between 1.25 and 1.75 percent.

"There are very real, physical manifestations of the closure of the Strait of Hormuz that are working their way around the world," Chevron CEO Mike Wirth said at S&P Global's CERAWeek conference on March 28. Christopher Knittel, an energy economist at MIT, told Fortune: "What we're seeing is infrastructure actually being destroyed, which means the ramifications of this war are going to be long-lived."

Three Scenarios Ahead of April 6

Analysts have outlined three broad paths depending on what happens around the April 6 deadline and whether the Strait reopens.

In a near-term resolution scenario, diplomatic progress produces a framework before or shortly after April 6, and the Strait begins to reopen. Goldman Sachs models Brent returning toward $85 per barrel by year-end under this outcome. Under this path, gas prices would decline but not immediately, as supply chain effects already in motion, including fertilizer costs, freight rates, and repriced contracts, would keep economic pressure elevated through much of the second quarter.

In a prolonged stalemate scenario, the Strait remains selectively closed through Q2, the April 6 deadline passes without a breakthrough, and Iran continues operating its toll-booth regime for approved ships. Goldman Sachs projects Brent averaging $115 per barrel in April under this path. Goldman forecasts U.S. GDP growth decelerating to between 1.25 and 1.75 percent in the second half of the year. The OECD projects U.S. inflation reaching 4.2 percent. Goldman Sachs places recession probability at 30 percent and Moody's Analytics near 50 percent under conditions consistent with this scenario.

In an escalation scenario, the U.S. strikes Iranian power plants after April 6, Iran retaliates against Gulf energy infrastructure and potentially desalination facilities, and the Houthis resume active anti-shipping operations in the Red Sea. Macquarie Group has warned that if the war extends into summer, oil could reach $200 per barrel, which would push national gasoline prices toward $7. The Dallas Fed's model estimates that a full-quarter Strait closure lowers global real GDP growth by an annualized 2.9 percentage points. A simultaneous closure of both the Strait of Hormuz and the Bab al-Mandab Strait would remove two of the world's three most important oil shipping corridors from operation at the same time, a scenario without a modern precedent.

Looking Ahead

April 6 is the current deadline for Iran to reopen the Strait or face U.S. strikes on its power plants. Trump has extended the deadline twice since first issuing it. The two sides have exchanged ceasefire proposals through intermediaries but have not entered direct talks, and their stated conditions remain substantially different.

Fortune reported this week that when Trump said the war was "very complete, pretty much" on March 9, one week in, oil fell $13 on the statement before rising more than 50 percent over the following three weeks. As of March 31, approximately 2,000 vessels remain waiting on both sides of the Strait, 20,000 sailors are stranded in the Gulf according to the U.N.'s maritime agency, and Iran is collecting transit fees in yuan from ships it approves for passage.

The price effects already visible at the pump, in freight rates, and in fertilizer markets represent the early transmission of the supply shock. Research I co-authored in 2022, published in Energy Economics, found that crude oil price shocks transmit to retail fuel prices gradually, with the full impact accumulating over several months as contracts roll over. That accumulation is ongoing.