"U.S. Oil Inventories Plummet, Gasoline and Diesel Prices Near Record Highs" - Wood Mackenzie

원본보기 아이콘

As the Strait of Hormuz has been blocked due to the U.S.-Iran war, U.S. crude oil and petroleum product exports have reached an all-time high. However, there are concerns that U.S. oil inventories are plummeting, causing retail prices for gasoline and diesel to surge and approach the record highs set in June 2022. This is placing a heavier burden on household finances due to rising consumer prices.

Wood Mackenzie, an energy and natural resources research firm, stated this in an article titled "Falling US oil inventories put upward pressure on fuel prices" published on May 4 (local time).

The following is a summary of the main points.

Three weeks ago, U.S. President Donald Trump mentioned that an "enormous number" of empty oil tankers were heading to the United States to load crude oil and petroleum products. This week, we have seen the results, as these tankers have begun transporting urgently needed supplies to the global market.

This has resulted in a tighter U.S. fuel market and increased upward pressure on prices. American consumers, who have already been concerned about rising gasoline prices over the past two months, are experiencing additional financial strain on their households.

On April 30, President Trump stated that a temporary rise in fuel prices was a price worth paying to prevent Iran from acquiring nuclear weapons. He said, "Once the war ends, gasoline prices will come down; they will drop like a stone. There is plenty of supply. It's everywhere."

However, for the time being, the burden on the global energy system is becoming even more pronounced.

According to data from the U.S. Energy Information Administration, last week U.S. exports of crude oil and petroleum products reached a record 14.2 million barrels per day. This figure is 33% higher than during the same week in 2025.

Meanwhile, U.S. oil inventories are plummeting. Including the Strategic Petroleum Reserve, the total U.S. crude oil and petroleum product inventories decreased by approximately 24.1 million barrels last week. This ranks among the top five largest weekly declines on record.

This increasingly tight supply-demand situation is reflected in soaring retail prices. According to GasBuddy.com, the average U.S. retail price for regular gasoline is about $4.43 per gallon, up 36 cents from last week. This is only about 60 cents below the all-time high of $5.03 per gallon set in June 2022.

U.S. diesel prices have moved even closer to record highs. According to the American Automobile Association, as of Friday, the average retail price for diesel was $5.57 per gallon. The all-time high, also set in June 2022, was about $5.82 per gallon.

Rising fuel prices are increasing pressure on the administration and the U.S. economy. According to a new Gallup poll released this week, 55% of respondents said their personal financial situation is worsening. This is the highest level in the 25-year history of this survey.

Additionally, it was announced this week that inflation, as measured by the core Personal Consumption Expenditures (PCE) price index, rose to 3.2% in March. This is the highest level since November 2023. The core index is the indicator most closely watched by the U.S. Federal Reserve. While it excludes energy and food, it does reflect price increases implemented by companies in response to higher fuel costs.

With the midterm elections scheduled for November 3 now just six months away, issues related to the Strait of Hormuz and global oil supply are likely to become increasingly important topics in U.S. politics.

The surge in U.S. oil exports last week demonstrates that, although the United States is the world's largest oil producer, it remains integrated with the global market and still exposed to international shocks. As supply-demand conditions tightened in other countries' markets, U.S. crude oil and petroleum products responded to market signals and flowed to those countries, leading to upward price pressure domestically.

The spread between Brent crude and the U.S. benchmark West Texas Intermediate (WTI) has been volatile in recent weeks, but overall, both markets have moved in tandem. Since the war began at the end of February, July Brent futures have risen by about 58%, while WTI futures for the same month have climbed approximately 55%.

The outlook for U.S. fuel costs-and, by extension, consumer finances-still depends critically on developments in the global market. And that, in turn, depends on what happens in the Strait of Hormuz.

Last month, Wood Mackenzie analysts published an analysis showing the oil price level necessary to balance global supply and demand if the Strait of Hormuz remains closed. If transit through the Strait continues to be severely disrupted at a very low level, global oil supply would fall by about 10 million barrels per day. To reduce global demand sufficiently to match this, Brent crude prices would need to exceed $200 per barrel. Such prices would act to reduce oil consumption through substitution effects and declines in gross domestic product (GDP).

If oil prices were to actually reach that level, U.S. gasoline prices would rise far above current levels and set new all-time highs, while the global economy would plunge into a severe recession.

The complex shock to the U.S. economy would make the pressure we have seen so far seem relatively mild by comparison.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.