Gasoline Futures Fall from 5-Month High

US gasoline futures fell below $2 per gallon, moving away from a five-month high of $2.01 hit on February 19, as traders awaited developments from nuclear talks between the US and Iran, which are set for a third round on Thursday in Geneva, according to Oman’s Foreign Minister Badr Albusaidi. Donald Trump said he favors a diplomatic solution but warned of consequences if no deal is reached, keeping markets cautious given the Strait of Hormuz’s role as a key route for nearly a third of global tanker traffic. Meanwhile, Ukrainian strikes on Russian refineries forced Russian companies to export crude rather than gasoline. The EIA weekly report showed a 3.2 million barrel draw in national gasoline stocks for the second week of February, exceeding expectations for a 300 thousand barrel drop.

Gasoline futures for delivery at the New York Harbor rose to over $2.0 per gallon in February, testing the highest level in five months as higher risk premiums for crude oil shipments lifted the costs of feedstock for refineries. Tensions between the US and Iran culminated in reports that the US could intervene militarily as soon as next week, with Israeli officials calling for a regime change in Tehran. The moves risked Iran's possible blockade in the Strait of Hormuz, a chokepoint for nearly one third of global tanker traffic. In the meantime, Ukrainian strikes in Russian refineries cut a major source of gasoline production, forcing Russian energy companies to export crude instead of gasoline. Stateside, the weekly inventory count by the EIA reflected a 3.2 million barrel draw in national stocks in the second week of February, more than market expectations of a 300 thousand decrease.

US gasoline futures rebounded to around $1.95 per gallon on Wednesday, following gains in crude after US Vice-President JD Vance said Tehran had not met American “red lines” in the discussions, keeping the risk of conflict and supply disruption alive. Iranian officials described the talks as constructive, highlighting differing views on progress. Iran’s naval drills and the strategic importance of the Strait of Hormuz, through which a significant share of global oil exports transit, have added to risk premia in oil pricing. Market attention also turned to upcoming US weekly petroleum data, with the American Petroleum Institute report due later Wednesday and the Energy Information Administration release on Thursday. Analysts expect US crude stockpiles to have risen, while distillate and gasoline inventories likely declined.