Gasoline Rises Back Toward 4-Year High

Gasoline futures for delivery at the New York Harbor rose above $3.50 per gallon, climbing back toward their four-year high, as fresh clashes in the Middle East heightened worries over prolonged energy supply disruptions. The US and Iran traded attacks in the Strait of Hormuz, with each side blaming the other for sparking the clash, raising doubts about the month-long ceasefire. Traffic through the Strait of Hormuz has remained suspended since early March, disrupting the flow of roughly 20 million barrels per day of oil and refined fuels to key importing nations. At the same time, shortages of diesel and jet fuel in Europe and Asia prompted major refiners to shift more capacity toward distillate production rather than gasoline, worsening supply concerns. As a result, US gasoline inventories fell for an 11th consecutive week, further tightening stockpiles ahead of the peak summer demand season.

Gasoline futures for delivery at the New York Harbor fell toward $3.40 per gallon, extending its retreat from a four-year high of $3.75, as the potential end to the war between the US and Iran improved the Middle East supply outlook. Reports indicated that the US was close to agreeing on a memorandum to end the conflict with Iran. An end to the war would likely start the process of restoring tanker flows through the Strait of Hormuz, enabling GCC from exporting their full storages of fuel. Shipping activity through Hormuz has been halted since the start of March, disrupting 20 million bpd of oil and refined products for major importers. On top of that, jet fuel and diesel shortages in Europe and Asia drove major energy producers to prioritize their refining capacity for distillates instead of motor gasoline, exacerbating supply risks. Consequently, US gasoline stocks sank for the 11th straight week, depleting inventory ahead of the high-demand summer season.

US gasoline futures fell below $3.50 per gallon, extending their retreat from a near four-year high on hopes of de-escalation in the Middle East conflict. President Donald Trump said efforts to guide stranded vessels out of the Strait of Hormuz would be temporarily paused to allow space to finalize a settlement with Iran aimed at ending the war, though he maintained his blockade of Iranian ports. His remarks came after Secretary of State Marco Rubio said the ceasefire in the Middle East remains intact and that the initial major US military operation against Iran has concluded, further calming markets. Meanwhile, Iran denied carrying out attacks against the UAE and warned of a “decisive response” if Abu Dhabi launches strikes on its territory. On the fundamentals side, the EIA reported increased gasoline demand for the week ending April 24, alongside a decline inventories and slightly lower production.