JPMorgan flags risk of $5 US gasoline

JPMorgan (JPM) analysts have cautioned that US gasoline prices could reach $5 a gallon as stress builds across global energy markets. Their warning centers on how refiners are responding to rapid changes in demand and pricing across different fuel products.

Refiners are increasingly prioritizing jet-fuel production over gasoline and other products. This shift is being driven by the much sharper price increase seen in jet fuel, which has made it relatively more attractive for refiners to produce compared with gasoline.

The ongoing conflict involving Iran has become a key driver of the current energy market strain. Brent crude (UKOIL) prices have averaged about $100 since the conflict began, according to the analysts, adding steady upward pressure on fuel costs worldwide.

The closure of the Strait of Hormuz has further tightened conditions by disrupting around 20% of global oil supplies. This chokepoint disruption has reduced the flow of crude and refined products to international markets, contributing to higher prices.

Jet fuel prices in North America have surged 95% since the start of the Iran war. This near-doubling has made jet fuel significantly more profitable for refiners than many other fuel streams.

As refiners allocate more capacity to jet fuel to capture these elevated margins, the relative supply of gasoline can tighten. JPMorgan’s (JPM) warning about potential $5 a gallon gasoline reflects concern that this product shift, layered on top of high crude prices, could push pump prices higher.

Analysts note that the combination of high Brent crude (UKOIL) prices, disrupted oil flows through the Strait of Hormuz, and surging jet fuel prices has created a volatile energy market. The situation is being closely watched for its potential effects on both transportation costs and consumer budgets.

For airlines, the 95% spike in North American jet fuel prices poses operational challenges and raises cost pressures, which can ultimately feed through to ticket prices and travel demand. For motorists, the prospect of $5 gasoline highlights how geopolitical conflict and refining choices can quickly influence everyday expenses.

With no clear resolution to the Iran conflict cited in the analysis, JPMorgan’s assessment underscores how sensitive fuel markets are to supply disruptions and shifts in refinery output. The firm’s warning signals that energy prices may remain a key risk factor for the broader economy as long as these conditions persist.