Gas prices expected to rise higher ahead of Memorial Day as Strait of Hormuz closure hits 78 days

Gas prices are likely heading higher this week ahead of Memorial Day, even as oil markets send mixed signals in the face of escalating tensions between the United States and Iran, according to one of the nation’s leading fuel price analysts.

Patrick DeHaan, head of petroleum analysis at GasBuddy, tells “Seattle’s Morning News” that oil prices have been volatile overnight but are defying expectations by falling even as the conflict over the Strait of Hormuz intensifies.

“Oil prices down this morning again doesn’t make a whole lot of sense with these escalations happening,” DeHaan said. “I do believe the national average, which dropped in the last week a whopping penny, may start to heat back up.”

Iran tensions escalate, but oil prices defy expectations

The comments come as President Donald Trump continues to pressure Iran to reopen the strait, which has been closed for 78 days. Trump posted an inflammatory message over the weekend suggesting there “won’t be anything left of the country” if it didn’t open the waterway.

West Texas Intermediate crude oil was down about $1.30 a barrel Monday morning despite the heightened rhetoric.

In Seattle, prices dipped about a nickel over the past week to an average of $5.90 a gallon. But DeHaan expects most Americans will see prices climb in the days ahead following last week’s jump in oil prices.

Despite the rising costs, DeHaan said consumers are unlikely to cancel their holiday travel plans.

“Americans have very robust summer travel plans, and I don’t know that high gas prices are going to erode that, at least for Memorial Day, July 4, and Labor Day,” he said. “A lot of Americans want to kick-start the summer and are probably not going to be held back much by gas prices.”

However, government data points to a small decline in the four-week average of implied gasoline consumption, suggesting fuel costs are having a low-level effect on demand. DeHaan said that the impact could become more visible in June, traditionally a sluggish month for fuel demand.

Supply is rising, but the Strait of Hormuz is creating new shortages

On the supply side, refineries are ramping up production. Refinery utilization jumped nearly two percentage points last week, a sign that facilities have completed seasonal maintenance and are producing summer-blend gasoline at higher rates. In a typical year, gas prices peak in April or May before gradually declining.

But this is not a typical year. The prolonged closure of the Strait of Hormuz is now creating ripple effects beyond fuel prices. DeHaan said base stocks used in specialty motor oils — many of which originate in the Middle East — are becoming harder to source. Automakers, including Toyota and Nissan, along with parts distributors like AutoZone, have warned of potential shortages and price increases for manufacturer-specific oils.

“It’s now starting to have a ripple effect on not only motor oils but just about anything that would flow through the strait,” DeHaan said.

As for the broader oil market, DeHaan said he is struggling to make sense of recent price movements.

“I have to question the integrity of the market,” he said. “We’ve seen many reports of major trades before major movements. It seems like there’s some irrational market moves that don’t make sense. I’m surprised oil prices aren’t higher, given the fact that this has now been ongoing for 78 days. It may appear that there’s some outside forces here at work.”

Manda Factor is the co-host of “Seattle’s Morning News” on KIRO Newsradio. Follow Manda on X and email her here. 

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