US gasoline and distillate inventories are approaching a threshold that energy analysts describe as operationally critical — a point at which any minor supply disruption could produce fuel shortages and lines at gas stations across the country.
The EIA’s latest weekly report and May Short-Term Energy Outlook warn that US fuel inventories are depleting at a pace the agency describes as unsustainable through 2026. HFI Research, analyzing that data, put the current margin at roughly 9 million barrels above what it calls the paycheck-to-paycheck threshold for gasoline and distillate — the level at which a single refinery outage, pipeline disruption, or demand surge leaves the system with no buffer.
The May 22 EIA weekly showed gasoline stocks declined 2.6 million barrels for the week, larger than the 2.3 million barrel draw analysts had expected. Distillate inventories fell an additional 2.1 million barrels, also above forecast. Total commercial petroleum inventories declined 8.3 million barrels for the week. Distillate stocks now sit approximately 11% below their five-year average for this time of year.
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The depletion traces directly to the closure of the Strait of Hormuz since the US-Iran war began on February 28. The International Energy Agency’s May report found that global oil supply has declined 12.8 million barrels per day since the conflict began, with output from Gulf countries running 14.4 million barrels per day below pre-war levels. The IEA called it the worst oil supply shock ever recorded in global markets.
Inventories have absorbed most of the impact so far, but that buffer is shrinking fast. Morgan Stanley estimated global stockpiles dropped roughly 4.8 million barrels per day between March 1 and April 25 alone — far exceeding the previous peak for any quarterly drawdown in IEA records. US distillate stockpiles hit their lowest level since 2005 last week, while gasoline inventories reached their lowest seasonal point since 2014.
Exxon Mobil Senior Vice President Neil Chapman issued his own warning at a Bernstein investor conference Thursday. Chapman told attendees the industry is “approaching unheard of inventory levels — I mean really, really low levels,” adding: “Once you get to the minimum inventory levels and all-time low inventory levels, there’s only one way to go.” He put the timeline at two to four weeks.
A US-Iran ceasefire agreement appears closer than at any point since the war began — Axios reported on Thursday that a memorandum of understanding has been agreed to in principle. But even a full reopening of the Strait would not quickly resolve the inventory crisis. Exxon CEO Darren Woods said in May that oil flows from the Persian Gulf would take “a month or two to normalize” after the strait reopens, as loaded tankers clear transit backlogs and refinery supply chains restabilize.
The EIA’s May Short-Term Energy Outlook projects the impacts on inventories, shipping patterns, and fuel pricing to continue throughout 2026 and potentially into early 2027. The agency forecasts retail gasoline to average $3.88 per gallon across 2026 as a whole and diesel at $4.76 per gallon — figures the market has already surpassed.
As of May 18, the national average for regular gasoline stood at $4.48 per gallon, up $1.32 from a year earlier; diesel averaged $5.52 per gallon, up $2.04 year-over-year.
Related: The US Is Draining Its Oil Reserves at Record Speed—and It May Not Be Enough
Since the Strait closed, the US has drawn down both commercial inventories and strategic petroleum reserves while ramping exports to cushion supply shortfalls for allies — a posture that has slowed the global crisis but depleted domestic buffers in the process. IEA member nations agreed in March to release a record 400 million barrels from strategic reserves. Those releases have bought time — but not indefinitely.
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