ARCADIA, CALIFORNIA – MAY 11: An American flag flies above gas prices displayed at a gas station on May 11, 2026 in Arcadia, California. President Trump today said he wants to suspend the national gas tax amid elevated gas prices as the war in Iran continues. The gas tax currently stands at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel. (Photo by Mario Tama/Getty Images)
Getty Images
This week executives from both Exxon and Chevron, two of the largest oil producers in the United States came out and said oil could hit 160 dollars within weeks. Senior Vice President of Exxon Neil Chapman warned at the Bernstein conference that inventory levels of crude and gasoline are at historic lows and are reaching their operational floor. Chevron Chief Executive Mike Wirth made similar statement and alluded to oil reaching those price levels in July. This is not a matter of politics or messaging; this is simply math. There may be no way of avoiding it.
The Energy Information Administration is now reporting that gasoline inventories in the U.S. have fallen for 15 straight weeks, while this is not unusual for spring and early summer it’s the amounts that are staggering. Inventory levels for gasoline have dropped by 40 million barrels in that time and now sit 6% below the five-year average. What is even more concerning, is that all those big, beautiful tankers Donald Trump told us about coming to the United States are still coming and will be for quite some time. These tankers are here to take our gasoline, our diesel, and our jet fuel, not just oil. This is drawing our inventories down to historic lows, and will soon put an enormous amount of pressure on prices right here in the U.S.
Now add to this the fact that we are entering into summer driving season, when demand for gasoline can easily rise by a million barrels a day during peak summer days, this means the drawdown of these inventories are only going to accelerate. We simply cannot continue to provide the world with the fuel they need; we don’t have it. Once these exports slow or stop due to us hitting operational floors, we will soon see shortages in places like Asia and Europe. That is when oil prices will spike, and we will be dealing with very high prices and extremely low inventory, this is a recipe for possibly record gas and diesel prices here in the U.S.
Oil production is down in the Middle East by over ten million barrels of oil a day according to the E.I.A. Roughly 80% of that is due to wells being shut in as the storage facilities are completely full, and the rest is due to damage to infrastructure. What this means is that once the Strait of Hormuz is open it will likely be two months minimum before tankers can make the round trip out of the area and return to start relieving the full storage tanks, only then can production resume. Every day this continues, we are deeper into shortages that are coming into July, as it would already be August at best for full flows to resume even if the Strait opened today.
This is why reaching a deal with Iran immediately is so important, it’s also why they are gaining leverage every day. So don’t be fooled by temporary price drops that come with endless statements about deals being made. Physical barrels of oil don’t care about politics, or the message, or what the stock market is doing, and when they are gone, they are gone.