U.S. gasoline and diesel prices near $4 and $5 as refinery constraints tighten
U.S. gasoline averaged $3.94 per gallon and diesel topped $5, driven by limited refinery capacity, high crude prices and strong seasonal demand rather than solely by Middle-East tensions.
Average U.S. gasoline prices rose 15 cents in a week to $3.94 a gallon, pushing the price toward the $4 mark, while diesel reached $5 a gallon for the first time in three weeks, according to the American Automobile Association. The increases follow a recent collapse of a memorandum of understanding between the United States and Iran, which sent crude oil prices above $85 a barrel after hovering in the low $70s.
Crude price gains account for part of the fuel price rise, but gasoline and diesel have climbed more than 32% since the conflict began, outpacing the 16% increase in crude. Analysts attribute the disparity to refinery constraints. During the brief period when the Strait of Hormuz was partially open, more than 200 million barrels of crude left the Gulf, yet refinery output fell by about 3 million barrels at the peak of the disruption, and roughly 2.1 million barrels of capacity remain offline, according to JPMorgan commodities economist Natasha Kaneva.
Additional pressure comes from damage to Russian refineries caused by Ukrainian drone strikes, which has reduced global diesel supplies. In the United States, refineries operated at 96% of capacity in the previous month, processing the highest crude volume since 2019. However, a large share of the output is being exported as jet fuel to Europe and diesel to Asia and Australia, leaving domestic gasoline inventories at 210 million barrels—just 20 million barrels above the level deemed critical, said Andy Lipow of Lipow Oil Associates.
With U.S. gasoline inventories near their lowest since 2012 and summer travel demand rising, the market faces a tight supply-demand balance. Refinery profit margins, known as crack spreads, have surged, with gasoline spreads up 60% year-over-year and diesel and jet fuel spreads more than double their 2025 levels, according to the U.S. Energy Information Administration. Seasonal heat also threatens refinery efficiency, as higher ambient temperatures can limit processing capacity.