Gasoline Prices Approach 4-Year High

Gasoline futures in the US extended gains to $3.70 per gallon, approaching the four-year high reached in early May, driven by fears of a prolonged energy supply crunch in the Middle East. US President Donald Trump maintained an increasingly hardline stance toward Tehran as negotiations between the US and Iran remained deadlocked, leaving the Strait of Hormuz largely closed. Concerns also intensified after reports that energy facilities in the Persian Gulf were targeted over the weekend. Energy exports from the key region have remained heavily disrupted since early March, causing global oil inventories to decline at a record pace, according to the IEA. Meanwhile, US gasoline stockpiles fell for a 13th consecutive week in early May despite a slight increase in production, as refineries continued operating near full capacity using feedstock supplied from the SPR.

Gasoline futures in the US were above $3.60 per gallon, near the four-year high of $3.75 touched May 4th as the continued tanker blockade in the Persian Gulf prolonged the suspension of oil and fuel supply from the region. The US and Iran remained in an impasse that extended their respective threats on commercial vessels flowing through the Strait of Hormuz. On top of that, US President Trump stated the current ceasefire has grown fragile, dimming the likelihood of an agreement. Energy exports from the key region have been at a standstill since the first week of March, driving global oil inventories to drop at a record pace, per the IEA. Likewise, gasoline stocks in the US sank for the 13th consecutive week in early May even though production inched higher, as refineries have been operating at full capacity with feedstock from the SPR.

Gasoline futures for delivery at the New York Harbor held above $3.50 per gallon, remaining near a four-year high, as the Middle East conflict continues without a clear resolution, sustaining disruptions to energy supply. US President Donald Trump dismissed Iran’s latest proposal to end the conflict, keeping the crucial Strait of Hormuz effectively closed. At the same time, Israeli Prime Minister Benjamin Netanyahu warned that the conflict with Iran was “not over,” heightening concerns over further military escalation. Shipping activity through the Strait of Hormuz has been halted since early March, disrupting the flow of nearly 20 million barrels per day of crude oil and refined products to major importing countries. Tightening diesel and jet fuel supplies in Europe and Asia have also led major refiners to prioritize distillate production over gasoline, further adding to concerns over fuel availability.