MW Think gas prices are high now? This quiet shift at U.S. refineries could trigger an even more painful summer.
By Myra P. Saefong and Claudia Assis
Planes over cars: $5-a-gallon gas could be here by July or August because of what is going on at refineries, one expert says
Americans are facing higher gasoline prices as the war with Iran drags on.
U.S. refiners are producing and exporting jet fuel at a record clip at the expense of their gasoline and diesel runs, a worrying mismatch as the summer travel season kicks into high gear and stockpiles dwindle.
Refiners have moved quickly to stem what was expected to be a global shortage of jet fuel this summer as the near-standstill at the Strait of Hormuz continues and fresh U.S.-Iranian clashes cloud hopes for a peace deal.
The switch, however, has left U.S. gasoline and diesel reserves below multiyear averages just as summer demand for both is gearing up, which could result in higher prices at the pump. And Americans who are already paying more than $4 a gallon on average for gas may be left scratching their heads over the focus on jet fuel.
"It's business," said Andy Lipow, president of Lipow Oil Associates in Houston.
Pricier jet fuel has been one of the most emblematic effects of the war with Iran and the energy shocks that have ensued.
The concern has been particularly acute in Europe, which before the conflict got about 60% of its jet fuel from refineries in the Persian Gulf. With the Strait of Hormuz essentially closed, much of that jet fuel remains trapped in the Middle East. The strait was previously the conduit for about one-fifth of the world's output of crude and crude-oil products.
Refineries responded by increasing production and prioritizing jet fuel over gasoline and diesel, said Mohith Velamala, an energy analyst at BloombergNEF. Europe is also getting more of its jet fuel from Nigeria, he said.
U.S. weekly exports of jet fuel hit a record 455,000 barrels in recent weeks, and there has been a commensurate increase in U.S. jet-fuel production. That production has topped 2 million barrels per day, and the latest U.S. Energy Information Administration jet-fuel production figures show output at a two-year record and only a fraction below the all-time high hit in July 2024.
Meanwhile, diesel stocks are about 3% below the five-year average forthis time of year, and gasoline inventories are 5% below the five-yearaverage. After 15 weeks of drawdowns, gasoline stockpiles rose in the week that ended May 29, the latest figures available, whereas analysts polled by the Wall Street Journal had expected another decline.
That uptick, however, is likely a "blip," said Al Salazar, an analyst at Enverus Intelligence Research.
Retail prices for both gasoline and diesel are likely to resume their upward march by the end of the month. Gas prices at $5 a gallon, last seen in the U.S. in June 2022 following Russia's invasion of Ukraine, could be here in July or August, he said.
Refiners have the ability to optimize their product slate, even with constraints around crude oil, Salazar said. U.S. jet-fuel exports are likely to moderate only if gasoline and diesel prices rise, he added.
Earlier in the conflict, International Energy Agency Executive Director Fatih Birol told the Associated Press that Europe had "maybe six weeks or so" of remaining jet-fuel supplies and warned that airlines would soon be announcing flight cancellations as global supplies of oil remained tight due to disruptions to oil shipping.
Read: Could a jet-fuel shortage turn your European summer vacation into a nightmare?
Global airlines responded by cutting capacity, mostly by trimming less profitable and less popular flights, such as those connecting smaller cities or flying very early or very late in the day.
Then came the response from refiners.
When the Middle East disruptions hit, jet-fuel cracks - the profits a refiner makes by refining crude into jet fuel - spiked sharply, said Nikolas Plonski, oil market analyst at Sparta Commodities. That "incentivized" refiners in the U.S. and elsewhere to produce more jet fuel, he said.
Refiners earn more per barrel by producing jet fuel than by producing alternative products such as gasoline and diesel, Plonski said, and U.S. refiners have the operational flexibility to act on that.
Back in March and early April, jet fuel was priced much higher than diesel, but the price difference has narrowed, BloombergNEF's Velamala said. Still, margins are attractive, and he expects jet-fuel production to stay above preconflict levels.
Despite higher retail prices for gasoline and diesel, the U.S. is in the "best situation out of probably any country in the world" in regards to energy, as it both produces and exports crude and crude products, said Matt Smith, a senior analyst with Kpler.
The U.S. has been a net exporter of combined crude and crude products since 2020 and just last month became a net crude-oil exporter.
-Myra P. Saefong -Claudia Assis
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June 04, 2026 10:25 ET (14:25 GMT)
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