US Gasoline Prices Top $4.50 a Gallon as Summer Driving Season Nears

The U.S. national average retail price of gasoline surpassed $4.50 a gallon on Tuesday for the first time since July 2022, data from GasBuddy showed, as the U.S.-Israeli war with Iran kept disrupting a substantial portion of global oil supplies shipped through the Strait of Hormuz.

As the U.S. Memorial Day weekend approaches and with it peak summer driving season, surging pump prices pose a major political risk for President Donald Trump and his Republican party as they campaign for midterm elections in November. Without de-escalation in the Middle East, analysts say U.S. motor fuel prices could rise past prior records.

The national average price of gasoline stood at $4.52 a gallon as of 5:20 p.m. ET on Tuesday, GasBuddy data showed. Prices breached $4 in late March, a level last reached in August 2022 after Russia’s invasion of Ukraine.

California had the highest average pump price in the country at $6.14 a gallon, according to GasBuddy data.

Gasoline prices have surged along with a rally in crude oil futures on fears of prolonged disruption in the Gulf. The global Brent crude benchmark has jumped 58% since the war began.

“The Strait of Hormuz shutdown continues to slowly push oil and gasoline prices higher, but we’ve also seen refining issues that have enhanced some of those increases,” GasBuddy analyst Patrick De Haan said.

Last week, BP’s 440,000-barrel-per-day oil refinery in Whiting, Indiana, experienced a brief power outage that caused one of its processing units to be shut down. Operations have since been restored, the company said.

“If the Strait of Hormuz does not open, I would expect that gas prices this summer would probably stay above $4.50 a gallon,” De Haan said.

Before the U.S. and Israel attacked Iran on February 28, about 20% of global oil supplies passed through the strait daily.

Morgan Stanley said U.S. gasoline inventories were drawing faster than the normal seasonal pattern. Its base case pointed to stocks falling below 200 million barrels by late August, near historical summer lows.

U.S. gasoline stocks fell over 6 million barrels last week and stood at 222.3 million barrels by April 24, the lowest since December, more than 2 million barrels below the five-year seasonal average, EIA data showed. Gasoline demand hit 8.95 million barrels on a four-week average basis, up 1% from the same time last year, the data showed. [EIA/S]

Morgan Stanley added that demand has held up despite $4-plus pump prices. “It is not driving the draws but it’s also not soft enough to slow the supply-driven stock draws.”

U.S. gasoline futures were trading around $3.64 a gallon on Tuesday, hovering at their highest level since 2022.

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(Reporting by Anushree Mukherjee in Bengaluru; Editing by David Gregorio)

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