Oil Prices Jump After Trump Rejects Iran's Hormuz Offer: What It Could Mean at the Pump

Fuel already costs far more than a year ago, and Monday's oil spike suggests relief may not come soon.

What happened

Oil prices climbed on Monday, Sept. 28, after President Donald Trump rejected Iran's proposal to reopen the Strait of Hormuz. The strait is a narrow waterway off Iran's coast. Before the war, roughly one-fifth of the world's oil supply passed through it, according to Al Jazeera.

The Associated Press reported that Iran had offered to reopen the strait and resume nuclear talks if the U.S. lifted its naval blockade, waived oil sanctions and agreed to a ceasefire that included Lebanon. Trump turned down the offer over the weekend, saying Iran wanted a deal because it was "losing so badly."

Early Monday, U.S. crude oil rose about 4% to around $96 a barrel, according to the AP. Brent crude, the global benchmark, also jumped. Contracts for November delivery traded near $108 a barrel, reflecting worries about near-term supply.

Where pump prices stand

According to AAA, the national average for a gallon of regular gas was about $4.48 on Sept. 28. That compares with about $4.09 a month ago and about $3.13 a year ago. In other words, a 15-gallon fill-up now costs roughly $20 more than it did last fall.

Diesel is even more painful. AAA's records show the national diesel average hit an all-time high of about $6.53 a gallon on Sept. 22. It eased only slightly, to about $6.45 a gallon on Monday, according to CBS News and Yahoo Finance.

A possible diesel export ban

On Sunday, Sept. 27, Trump told Fox News his administration is looking "very seriously" at banning exports of U.S. diesel. He also noted that a ban "can oftentimes lead to a little bit of an increase on gasoline for cars."

The U.S. exports about 1.5 million barrels of diesel a day, according to S&P Global Energy data cited by CBS News. Keeping that fuel at home could lower diesel prices for a while. Goldman Sachs analysts estimated a short-term drop of about 25 cents a gallon. But they also warned that once storage fills up, refiners may cut back, and each extra week of a ban could push gasoline prices up by about 30 cents a gallon.

Yahoo Finance reported the administration is also weighing options short of a ban, such as asking companies to limit exports voluntarily, suspending the federal diesel tax, or encouraging states to cut their own diesel taxes.

What this means for your wallet

Commuting and errands. Higher gas prices hit hardest for people who drive long distances or can't easily switch to other options. Even a small change per gallon adds up over a month.

Groceries and shipping. Diesel powers most trucks, trains and farm equipment. When diesel stays high, businesses often pass some of those costs along, which can show up in grocery bills and delivery fees.

Heating. Heating oil is closely related to diesel. Households in areas that heat with oil may want to watch prices as colder months approach.

Travel plans. Airlines pay more for jet fuel when oil rises, which can mean higher fares for holiday trips.

Ways to soften the hit

• Track your fuel spending for a month so you know your real number.
• Compare prices using a gas price app. Prices can vary a lot within a few miles.
• Combine trips and keep tires properly inflated, which helps fuel economy.
• Check your budget's "transportation" line. If fuel costs are squeezing other goals, you could trim a flexible category, like takeout, to make room.