Analysts are predicting a significant increase in gasoline prices for U.S. motorists in the upcoming weeks as major refinery outages have constrained supplies just before a seasonal surge in demand. The national average price per gallon has already risen by over 9% since the beginning of the year, hovering around $3.40 as of March 8, reaching levels not seen since early November, according to data from AAA.
The recent decline in gasoline stockpiles, coupled with ongoing refinery challenges globally, has set the stage for further price hikes. With U.S. gasoline inventories dropping by 5.7 million barrels to 234.1 million barrels, falling more than 2% below the five-year average, concerns over supply disruptions and escalating prices have intensified.
Tom Kloza, head of energy analysis at Oil Price Information Service, highlighted the convergence of factors contributing to the expected surge in gasoline prices, including rising summer travel demand, dwindling fuel stockpiles, and ongoing refinery operational issues worldwide.
Persistent refinery utilization rates below 87% for an extended period have exacerbated the supply crunch, with approximately 1.2 million barrels per day of U.S. refining capacity offline this week and an additional 885,000 barrels per day projected to be offline next week, as estimated by research firm IIR Energy.
Recent Ukrainian drone strikes targeting Russian refineries have further compounded supply concerns, leading to increased fuel and crude oil prices. These developments, combined with extended supply cuts by OPEC+ nations, have prompted the Energy Information Administration (EIA) to revise its retail gasoline price forecast for the year to $3.50 per gallon.
Against this backdrop, U.S. crude oil prices experienced a notable uptick, with prices surging to $79.72 a barrel for U.S. crude oil and $84.03 a barrel for Brent crude. The escalating geopolitical tensions and supply disruptions are expected to exert additional pressure on fuel prices in the near term.