The national average gasoline price reached $4.45 per gallon this week, according to AAA. That is $1.28 above the same week a year ago and $1.70 above the pre-conflict average of February 2026. Diesel sits at $5.64 per gallon, up $2.09 year-over-year.

Gasoline inventories have declined for 11 consecutive weeks. Memorial Day weekend, the traditional start of peak summer driving demand, is three weeks out.

Where the Price Comes From

Crude oil accounts for roughly 55 to 60 percent of the retail gasoline price. Brent at $111 translates directly into a higher input cost for every US refinery. The remaining cost components — refining margins, distribution, taxes, retail markup — have not changed dramatically. The crude price is driving the move.

The Hormuz blockade removed approximately 18 to 20 million barrels per day of strait traffic from global supply. The IEA's coordinated 400-million-barrel strategic reserve release has offset perhaps 15 percent of that gap. The rest has been absorbed through demand destruction, supply chain rerouting, and elevated prices.

Why Diesel Is Hurting More

Diesel carries a larger premium over gasoline than usual. Three reasons: diesel demand from freight, agriculture, and construction is less elastic than gasoline — it does not fall as sharply when prices rise. Middle Eastern crude produces a higher diesel yield than most alternatives, and Middle Eastern supply is what has been disrupted. And US diesel inventories have been drawn below the five-year seasonal average since late 2025, before the Hormuz crisis added further pressure.

The $5.64 diesel price is not just a consumer issue. Trucking rates have risen roughly 18 percent since March. Food and goods distribution costs are climbing. Producer price inflation at the wholesale level is running above headline consumer prices, which tends to feed through to retail prices over a three-to-six month lag.

Summer Demand Incoming

The EIA's summer outlook projects US gasoline demand rising to roughly 9.3 million barrels per day through Labor Day. That seasonal increase typically begins in late May and peaks in July. It adds pressure to an inventory situation that is already stressed after 11 consecutive weeks of draws.

If the Hormuz blockade remains in place through Memorial Day, the summer driving season will play out against a backdrop of continued supply constraint. The EIA's April forecast projected a summer average of $4.30 per gallon. That forecast is already below current prices, suggesting the agency's assumptions about supply normalization have not materialized.

What Would Bring Prices Down

A Hormuz resolution is the primary variable. A ceasefire that actually stopped both blockades would allow tanker traffic to resume, relieving the crude input cost within four to six weeks as shipments clear and arrive at refineries.

US shale production is the secondary lever, but it is moving slowly. Permian Basin producers told the Dallas Fed they expect only modest output increases through 2026. Capital discipline, not capacity, is the constraint. At $106 WTI, producers are profitable but not yet drilling aggressively enough to offset the global supply gap.

Short of a diplomatic breakthrough, prices near $4.50 per gallon are likely to persist through the summer. The 11-week inventory draw has to reverse, and the crude input cost has to fall, before the pump price follows.

This article is for informational purposes only and does not constitute financial or investment advice. Oil market conditions can change rapidly. Consult a qualified financial professional before making investment decisions.