Gasoline Prices Are Rising Faster Than Oil — Here's Why
Brent crude — a key global oil price — settled at $97.31 a barrel on September 7, 2026, up $1.03 or 1.1%, a six-week high driven by new U.S. strikes on Iran and renewed Israeli threats against Tehran Reuters. But the oil price is only part of the story. The bigger reason gasoline prices have kept rising longer than oil prices since the U.S.-Iran war began comes down to refineries MarketWatch.
Crude oil is the raw material. Refineries turn it into gasoline, diesel, and other products. The profit a refinery makes between buying crude and selling those products is called the crack spread. When that profit margin grows, gasoline prices climb even if oil prices stay flat.
The pressure on refineries traces to direct physical damage. Attacks on Gulf energy facilities took roughly 2.4 million barrels per day of refinery capacity offline across 20 Gulf coast plants, with refineries bearing the heaviest damage MarketWatch. A reported strike on fuel tanks at a refinery in Tehran on March 8, 2026 added to the conflict-driven supply erosion. That came on top of warnings from March 2026 that disruptions in oil flow through the Strait of Hormuz over a four-week period would trigger a sequential shock to global supplies MarketWatch. By August 2026, Reuters calculations showed almost half the world's oil came from countries affected by conflict Reuters. Analysts warned in May that developed nations face energy scarcity amid the oil crisis MarketWatch.
The refinery system's ability to absorb these shocks was already weakened before the conflict escalated. The EIA's 2026 Refinery Capacity Report, published June 29, covered 130 operable refineries — two fewer than the prior year, reflecting a decrease in U.S. refining capacity during 2025 EIA. LyondellBasell's exit from refining operations contributed to that reduction. The EIA had projected in March 2025 that refinery closures combined with rising consumption would draw down U.S. petroleum inventories in 2026 EIA. This is the backdrop against which 2.4 million barrels per day of Gulf capacity went offline.
The EIA estimates that roughly two-thirds of the pump price of gasoline comes from the cost of the crude oil itself EIA. The remaining third covers refining margins, distribution, marketing, and taxes. When the crack spread widens, that remaining third grows, and gasoline prices pull away from oil prices. That is exactly what has happened. Consumers are paying not just for scarcer oil but for scarcer refining capacity.
The EIA has previously noted that with little spare refinery capacity during peak demand periods, unexpected outages can produce localized supply disruptions EIA. The current episode is national rather than local. Historical precedent shows the price sensitivity: in early 2024, U.S. refinery utilization fell 11%, dropping as low as 81% during the two weeks ending February 9 and February 16, pushing gasoline prices higher EIA. During the 2022 summer driving season, the EIA projected refinery utilization of 96% in June, 94% in July, and 96% in August, with inputs averaging 16.7 million barrels per day EIA. Running refineries that hard leaves no room for error. The Gulf capacity loss from the Iran conflict dwarfs the seasonal tightness that drove those earlier price spikes.
For traders and refiners, the spread between U.S. crude futures and gasoline futures is the key number to watch. For consumers and policy makers, the relevant question is not when oil prices fall back but when Gulf refinery capacity comes back online. Neither has a clear timeline. The U.S.-Iran talks referenced in April's damage assessment have not produced a lasting ceasefire, as the September strikes confirm. Meanwhile, the EIA's pre-conflict projection of inventory draws in 2026 assumed refinery closures and rising demand — not wartime damage to 20 Gulf coast plants.
The broader context here is that this shift goes beyond the immediate price spike. When nearly half of global oil supply comes from conflict zones and refinery capacity is offline because of physical damage — not routine maintenance or normal economics — both the level and the volatility of fuel costs get repriced. Gasoline prices that used to follow oil prices with a predictable lag and proportion are now driven by refinery-level constraints that can persist on their own, regardless of what oil does. That disconnect is the real story beneath the headline number.
