US gas prices are nearing $4 a gallon, with diesel topping $5. While geopolitical tensions with Iran play a role, the surge is more complex than just oil prices.

Refinery capacity has been significantly impacted globally. Iran damaged 30 Middle Eastern refineries during the conflict, limiting recovery. Simultaneously, drone strikes in Ukraine have crippled Russian refineries, turning a major diesel exporter into an importer and causing a global shortage.

In contrast, US refineries are operating at 96% capacity, but a record amount of American fuel, including diesel and jet fuel, is being exported to fill global supply gaps. This has driven US gasoline inventories to their lowest levels since 2012, creating a low-supply, high-demand scenario. Factors like summer travel and upcoming harvests exacerbate this. Refineries also face challenges with extreme heat, which hinders their efficiency and production capabilities.