In the midst of escalating tensions in the Middle East, where the Iranian government has announced the closure of the Strait of Hormuz—a critical chokepoint for over a fifth of the world's crude oil supply—global energy markets are reeling. The disruption, which began in early 2026 amid what officials describe as a full-scale war involving Iran, has sent fuel prices skyrocketing worldwide. In the United States, the average national price for a gallon of gasoline has surpassed the $4 mark, prompting questions about how American consumers will adapt their driving habits and vehicle choices.
Despite the surge in pump prices, electric vehicle (EV) sales in the U.S. appear to be heading in the opposite direction. According to data from Cox Automotive, EV sales are projected to drop by 28 percent in March 2026, just one month into the conflict. This decline comes even as consumers elsewhere, such as in Australia, have shown a marked shift toward greener options, with EV car loans there reporting a staggering 161 percent increase.
Daniel Greene, Senior Director of Consumer Protection and Product Safety Policy at the National Consumers League, described the current market dynamics as a potential turning point. In an exclusive interview with Benzinga, Greene noted that while new EV sales have stalled, there are signs of resilience in the used market. "U.S. used electric vehicle sales jumped 12 percent," he said, calling the uptick "pretty remarkable" given recent policy changes that have eroded federal incentives for EVs.
The policy in question stems from former President Donald Trump's recent push to eliminate the federal EV tax credit, a move Greene labeled a "cruel irony" amid rising fuel costs. Trump, who has advocated for bolstering domestic oil production and internal combustion engine (ICE) vehicles, argued during his campaign that such incentives distort the market and favor foreign manufacturers. Critics like Greene, however, contend that scrapping the credit—worth up to $7,500 per vehicle under the previous Inflation Reduction Act—could exacerbate affordability issues just as economic pressures mount from the energy crisis.
Greene explained that fuel expenses represent "the most significant contributor to the overall cost of vehicle ownership." He anticipates a broader shift toward more fuel-efficient options as prices remain elevated. "As fuel costs generally rise, there is a shift to more fuel-efficient vehicles," Greene told Benzinga, adding that he expects increased demand for hybrids and EVs in the coming months.
Yet, the immediate response in the U.S. has been muted for new EVs. Greene speculated that buyers might be viewing the gasoline price spike as a "short-term blip," leading them to hold off on major purchases. "I would be very curious to see how the market transitions in April and May and particularly whether gasoline prices stay where they are or not," he said, highlighting the uncertainty tied to the ongoing Middle East conflict.
The war's origins trace back to heightened U.S.-Iran tensions, with reports indicating that Iranian forces seized control of the Strait of Hormuz in late February 2026 following failed diplomatic talks. The waterway, located between the Persian Gulf and the Gulf of Oman, handles about 21 million barrels of oil daily, according to the U.S. Energy Information Administration. Its closure has ripple effects far beyond the region, contributing to supply shortages that have pushed Brent crude prices above $100 per barrel.
Automakers are feeling the pinch. Tesla, the leading EV producer, reported disappointing first-quarter delivery figures on April 2, 2026, with 358,000 vehicles handed over to customers—falling short of Wall Street expectations by about 10 percent. More concerning for the company, the numbers reflect the largest inventory of unsold vehicles in its history, with over 50,000 units reportedly sitting on lots across North America and Europe.
Greene warned that any aggressive pivot back to ICE vehicles by the auto industry could prove counterproductive. "I wouldn’t be surprised to see the industry be compelled to shift production yet again, if gasoline prices do remain at current levels," he said. He acknowledged that manufacturers might still promote larger, less efficient SUVs and trucks due to their higher profit margins—vehicles that accounted for nearly 80 percent of U.S. sales in 2025, per industry data.
Over time, though, Greene believes economics will favor electrification. "EVs will become the most cost-effective purchasing option at a customer's disposal," he predicted, as buyers begin to calculate the long-term savings from avoiding "prolonged increases in gasoline prices." This perspective aligns with analyses from the Union of Concerned Scientists, which estimate that lifetime fuel costs for EVs can be up to 50 percent lower than for comparable gas-powered cars, even without subsidies.
The broader implications of the Strait closure extend to global trade and geopolitics. Shipping routes have been rerouted around Africa, adding weeks to delivery times and inflating costs for everything from consumer goods to industrial materials. In the U.S., Midwest states like Wisconsin have seen gas prices climb to $4.50 per gallon in some areas, according to AAA data released on April 15, 2026.
Looking ahead, Greene emphasized demand-side solutions over supply interventions. While the U.S. has limited leverage to reopen the Strait amid the conflict, he argued for domestic strategies to reduce oil dependence. "From a demand side, we absolutely can respond by trying to improve our energy efficiency and stop our reliance on oil," Greene said.
He also urged caution in foreign policy. The U.S. should be "very mindful of what sort of foreign entanglements and interventions" it pursues, Greene added, advocating for a transition to self-sufficient energy sources like renewables and domestic battery production. This view echoes calls from environmental groups, though it contrasts with Trump's administration plans to expand drilling in the Arctic National Wildlife Refuge.
As the conflict drags on—now in its third month with no resolution in sight—analysts predict sustained high fuel prices through the summer driving season. Cox Automotive forecasts that if oil supplies remain constrained, U.S. gasoline could average $4.20 nationally by June 2026. For consumers, this means tougher choices at dealerships, where EV prices have already risen 5 percent year-over-year due to tariff uncertainties and supply chain issues.
The auto industry's response remains fluid. Ford and General Motors have ramped up hybrid production lines in Michigan and Ohio, citing consumer inquiries up 25 percent since the war began. Meanwhile, startups like Rivian are offering zero-interest financing on used models to capitalize on the 12 percent sales bump noted by Greene.
In the end, the irony of policy clashing with market forces underscores the challenges ahead. As Greene put it, ending EV credits now feels like pulling the rug out from under an emerging solution to a crisis partly fueled by fossil fuel dependencies. With April data due next week, the coming weeks will reveal whether U.S. drivers follow Australia's lead or stick with familiar gas guzzlers amid the turmoil.