Gas Prices Hit $4.50 as Iran War Strains Markets, While Texas Scrambles to Power the AI Boom

The national average price of gasoline climbed 31 cents in the past week, spiking to an average of $4.48 per gallon Tuesday, according to AAA, hitting the wallets of drivers after rising 50% since the war with Iran began , according to PBS. Now at a national average of more than $4.50 per gallon, according to data from motor club AAA, this price increase is straining already-stretched budgets in households across the country , NBC News reported.

The price of crude oil, which is the main ingredient in gasoline, has been climbing for most of the past two months because the Strait of Hormuz, the narrow passage of the Persian Gulf through which a fifth of the world's crude oil normally passes, has effectively been shut, and oil tankers have been stranded there unable to deliver crude , according to PBS. According to market data, WTI crude traded at $71.50 per barrel on Tuesday, up 0.6%, while Brent crude stood at $75.20 per barrel, up 0.5%.

The situation took a dramatic turn this week when President Donald Trump said he is pausing "Project Freedom," the U.S. military's bid to guide commercial ships out of the Strait of Hormuz , CNBC reported. Trump wrote on Truth Social that "based on the request of Pakistan and other Countries" and "the fact that Great Progress has been made toward a Complete and Final Agreement with Representatives of Iran, we have mutually agreed that, while the Blockade will remain in full force and effect, Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time" , according to NBC News.

The pause came after the Trump administration said that nearly 23,000 sailors on vessels representing 87 countries have been stranded in the Persian Gulf because of Iran's de facto closure of the Strait of Hormuz , CNBC reported. Even if the conflict ends soon, experts warn the damage will linger. "Even if there was a true and lasting resolution of the conflict, both sides agree to play nice and truly do commit to keeping Hormuz open, it will still take months to get back to what it was pre-war, if not even longer," Smith said , PBS reported.

UAE Breaks With OPEC as War Reshapes Energy Markets

In a move that caught many by surprise, the United Arab Emirates announced its decision to quit OPEC and OPEC+ to focus on "national interests", dealing a heavy blow to the oil-exporting groups at a time when the US-Israel war on Iran has caused a historic energy shock and rattled the global economy , Al Jazeera reported. The UAE will exit the Organization of the Petroleum Exporting Countries and the broader OPEC+ alliance effective May 1, 2026, a move officials say is aligned with long-term energy strategy , according to Gulf News.

The country plans to expand production capacity from about 3.4 million barrels per day to 5 million barrels per day by 2027, supported by upstream investment , Gulf News reported. UAE Energy Minister Suhail Mohamed al-Mazrouei said the decision was taken after a careful look at the regional power's energy strategies. Asked whether the UAE consulted with OPEC heavyweight Saudi Arabia, he said the UAE did not raise the issue with any other country , Al Jazeera reported.

Bloomberg reported that Energy Minister Suhail Al Mazrouei said in an interview that the disruption caused by the war created an opportune time for the move . The timing is particularly notable because experts say its departure from the cartel is unlikely to have an immediate impact on the market because the UAE's exports, like those of all its neighbouring countries, are currently constrained by Iran's control of the Strait of Hormuz , according to Al Jazeera.

Natural Gas Markets Caught Between War and Peace

Natural gas futures have been sliding as traders weigh the possibility of a diplomatic breakthrough. Natural Gas Intel reported that peace deal hopes and bearish forecasts are pushing natural gas futures lower, with prices declining in early Wednesday trading as markets took cues from global oil and LNG benchmarks on reports that the United States and Iran are nearing an agreement to end the war.

According to market data, Henry Hub natural gas traded at $3.25 per MMBtu on Tuesday, down 2.4% from the previous session. Meanwhile, Chevron reported that "all the big pistons in the engine are firing," and momentum is building in the second quarter as the supermajor provides steady natural gas and oil supply to tight global markets, Natural Gas Intel reported.

The White House has also thrown its support behind Alaska's long-delayed LNG ambitions. Natural Gas Intel reported that the White House has lent its support to Alaska legislation aimed at advancing the long-delayed Alaska LNG project, urging state lawmakers to consider tax reforms that could incentivize the massive export facility.

Texas Data Centers Build Around the Grid, Not With It

While global energy markets grapple with geopolitical turmoil, Texas is confronting a different kind of supply crunch: how to power the AI boom fast enough to keep pace with demand. At a hearing, ERCOT CEO Pablo Vegas told lawmakers that incoming businesses plan to pull 410,000 more megawatts from the grid over the next few years. That's about seven times more than the new demand that ERCOT had to accommodate just a couple years ago in 2024 , KUT Radio reported.

The solution? Many data centers aren't waiting for the grid at all. Hyperscalers and colocation providers expect that roughly one-third of data centers in 2030 will use 100% onsite power, a 22% increase from the previous report six months ago , according to Bloom Energy's 2026 Power Report. Reuters reported that Texas off-grid power build soars as data centers bridge grid delays.

Texas regulators have approved a first-of-its-kind arrangement allowing a data center to draw electricity directly from an existing wind farm, a move that could reshape how large energy users secure power in the state. In a unanimous 5-0 vote Thursday, the Public Utility Commission of Texas signed off on the novel setup, which one commissioner described as unprecedented for the state's primary electric grid , according to KUT Radio.

The AI boom is driving unprecedented power demand. Mining Technology reported that AI is driving a surge in data centre power demand, with rising rack densities, grid constraints, and evolving infrastructure reshaping power distribution for next-generation workloads. According to the IEA, electricity consumption from data centres is set to double by 2030, and power use from those focused on AI is poised to triple .

The scramble for power is creating strange bedfellows. CNBC reported that Nvidia and Corning are partnering on a massive optical fiber deal, with Corning opening three new advanced manufacturing plants in the U.S. dedicated entirely to optical technologies for Nvidia. The infrastructure buildout extends far beyond computing hardware—it's reshaping the entire energy landscape.