The possibility of gas reaching $5 per gallon is rising as refiners shift toward jet-fuel production and reduce output of other products, said JPMorgan.
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Trade QQQ with leverageSince the beginning of the U.S.-Iran war, prices at the pump have spiked to $4.55 from $2.98, or a rise of 52.7%. “The timing could hardly be worse,” wrote analysts at the firm. “The US driving season unofficially begins with Memorial Day at the end of May.”
Jet Fuel Prices Jump as Hormuz Disruption Tightens Supply
Jet fuel has been the most impacted by the global oil shock and the closure of the Strait of Hormuz. That has resulted in refiners prioritizing production of the fuel due to higher prices. “This likely helps explain why US gasoline prices are at $4.55 a gallon and why the risk of $5 gasoline can no longer be dismissed,” wrote the analysts.
Earlier this week, the U.S. submitted a 14-point memorandum to end the war with Iran, with terms detailing a gradual reopening of Hormuz. Iran has not yet responded to the proposal, although Secretary of State Marco Rubio said he expects to receive one today.