Iran War Could Ruin America's Biggest Ever 4th of July

A looming fuel shortage triggered by the Iran war threatens to deliver another price shock for Americans over the next few weeks, with experts warning that U.S. oil inventories could be depleted by the time of the nation’s 250th birthday.

In an interview with Bloomberg TV last week, the economist Jeff Currie, senior advisor at The Carlyle Group, said that U.S. oil storage tanks-the network of facilities used to hold crude oil and refined products-could run out "somewhere in that July 4 time period, if not sooner" given the rapid depletion of the country's reserves in recent weeks.

The U.S. Energy Information Administration (EIA) reported that oil and fuel inventories, including those from the Strategic Petroleum Reserve (SPR), fell by 14 million barrels in the week ending May 8, following 11-million-barrel and 24-million-barrel drops over the previous two weeks.

"The law of supply and demand is threatening to take prices higher…possibly much higher," Bob Yawger, director of energy futures at Mizuho, told Newsweek. "There is no easy way out."

Why It Matters

The summer period is typically the busiest time for travel in the U.S., typically peaking around Independence Day with demand also high around the Memorial Day weekend.

Even prior to the war, the EIA forecast that stocks of gasoline, distillate fuel oil, and jet fuel would reach their lowest levels in 2026-eroding a key cushion against price volatility in these categories. And with the war further straining domestic supplies, experts warn that U.S. could be headed for record-high gas prices this summer.

The national average price for a gallon of regular unleaded recently crossed $4.50 for the first time since the 2022 energy crisis, with analysts and even members of the administration warning that these could continue climbing for months barring a swift resolution in the conflict.

Earlier this week, energy market analyst Philip Verleger told Newsweek that he would "not be surprised" to see gas rise to $7 per gallon by the end of the season.

Is the US Running Out of Oil?

Currie said that in both the U.S. and Europe, demand has been outpacing supply and that this is triggering the decline in fuel inventories. However, he said that neither region was yet experiencing a shortage, which would occur once inventories "hit tank bottoms."

Global oil supplies have tightened substantially since the war began on February 28, due to the blockade placed on the Strait of Hormuz-through which around 20 percent of the world's typically passes-as well as production difficulties across the region. A Reuterssurvey published Monday found that output from the 11-member Organization of the Petroleum Exporting Countries (OPEC) dropped to its lowest level in 26 years in April due to these supply disruptions.

This has caused global oil inventories to deplete "at a record pace," according to the latest monthly report from the International Energy Agency (IEA), risking "further price volatility" going into of the heightened summer demand period.

Analysts at Goldman Sachs Global have warned that oil inventories are nearing an eight year low, and predict that stocks could drop to 98 days of global demand by the end of May.

The U.S. has sought to remedy the situation and ease the impact in global energy markets by boosting its own exports. American exports of oil and petroleum products hit a record high of 14.2 million barrels per day as for the week ending April 24, according to the EIA, slowing to 13 million and 13.1 million for the weeks of May 1 and May 8.

However, the country’s crude oil inventories for now remain well above concerning levels. Excluding the SPR-from which the administration has begun releasing a total of 172 million barrels-the EIA said that U.S. crude oil stocks currently sit at 452.9 million barrels, only marginally below the five-year average for this time of year.

But while crude oil stocks are healthy, Yawger told Newsweek that oil-product storage was "falling fast," noting that distillate-including petroleum products such as diesel fuel and heating oil-have sank to a 20-year low of around 102 million barrels.

He added that gasoline stocks have also fallen for three consecutive months, "at a time of year when it should be increasing in anticipation of the Memorial Day Weekend start to summer driving season."

"Summer driving season is going to get ugly unless the war is ended ASAP," he told Newsweek.

Last week, Currie said he had "never seen anything like" the inventory figures currently coming out of the EIA, and said these indicated a looming supply crisis.

"The analogy I think is like in that movie Jaws, when the mayor declares the beaches are open and you can see the fins swimming around there," he told Bloomberg TV. "And the fins are these inventory numbers."

As Currie said, these resources serve as a cushion preventing the current fuel deficit from turning into an outright shortage. And according to David Goldwyn, former State Department special envoy for International Energy Affair, this has till now helped to prevent a further surge in gas prices.

"All of the buffers which have helped moderate prices so far, release of the Strategic Petroleum Reserve, depletion of commercial inventories, even temporary waivers of sanctions on Russian and Iranian oil have all now been exhausted," Goldwyn told Newsweek earlier this week. "Barring a diplomatic resolution, we are looking at a national average of five dollars a gallon."

What Happens Next?

The administration has said it is "open to all ideas" when it comes to lowering domestic fuel costs. This week, President Donald Trump vowed to temporarily suspend the 18-cent federal gas tax-a move analysts say could make a modest difference but will likely fail to offset ongoing price increases.

Those who spoke to Newsweek sad only an end to the conflict could bring prices back down to pre-war levels, but Currie told Bloomberg TVthat even if the war ended quickly, it would take "three-plus months” for international oil flows to recover.

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This story was originally published May 15, 2026 at 5:30 AM.