Gasoline prices across the United States may climb to $5 per gallon as the conflict with Iran continues to disrupt global energy markets, according to new projections from JPMorgan analysts.

The bank said the fallout from the Middle East war is no longer limited to crude oil, with the effects now spreading into refined fuel markets, particularly gasoline and jet fuel.

In a report led by analyst Natasha Kaneva, JPMorgan said refiners are increasingly shifting production toward jet fuel, driven by surging worldwide demand and supply issues stemming from tensions around the Strait of Hormuz and damage to energy infrastructure in the region, the New York Post reported.

That reallocation, however, is putting additional pressure on gasoline availability in the United States.

“This likely helps explain why U.S. gasoline prices are at $4.56/gal and why the risk of $5 gasoline can no longer be dismissed,” the analysts wrote, the Financial Times reported.

The report explained that increasing jet fuel output typically comes at the expense of other fuels, noting that diesel production declines “almost proportionally” and gasoline supplies tighten as heavier crude inputs are diverted away from gasoline refining.

As a result, U.S. gasoline output has dropped significantly compared to last year, even as demand rises heading into the peak summer driving season.

According to AAA data released Monday, the national average for regular gasoline stood at $4.52 per gallon, while premium fuel was already averaging above $5.37. Diesel prices were higher still, reaching $5.64 per gallon.

In several Western states, average gas prices have already exceeded the $5 mark, and analysts warned that even small additional increases could push much of the country to that level.

A nationwide jump to $5 gasoline would carry major economic and political consequences.

The last time Americans saw prices at that level was briefly during the inflation surge of summer 2022 under President Joe Biden.

JPMorgan’s outlook comes as the ongoing war with Iran continues to place upward pressure on global oil prices.

Brent crude has remained near $100 per barrel since hostilities intensified earlier this year, according to the Post.

The rise in jet fuel costs is already rippling through other sectors of the economy.

Airlines have cautioned travelers to expect higher ticket prices and additional fees, while Spirit Airlines reportedly ceased operations amid rising fuel expenses and tightening margins.

At the same time, Americans are growing more concerned about the overall cost of living.

The University of Michigan’s Consumer Sentiment Index recently dropped to a record low, with respondents pointing to gasoline prices and inflation as leading financial concerns.

Analysts said meaningful relief is unlikely in the near term unless supply disruptions in the Middle East ease and fuel markets begin to stabilize.

{Matzav.com}