Short Answer

Both the model and the market overwhelmingly agree that US gas prices this week will be Above 4.340, with only minor residual uncertainty.

1. Market Behavior & Drivers

This prediction market has exhibited a stable, sideways trend, trading within a narrow six-point range between 93% and 99%. The market opened with a high probability of 97% and is currently priced at 98%, indicating sustained and strong confidence in a "YES" resolution. The price ceiling of 99% has served as a key resistance level, while the low of 93% acts as the primary support. Market sentiment has remained consistently bullish, reflecting a high degree of certainty among participants that the resolution condition will be met.
The consistently high probability is directly supported by recent news context. Reports indicate that the national average gas price has risen to $4.54 per gallon, which is well above the market's resolution threshold of $4.340. The market's initial high price and subsequent stability suggest that traders anticipated or quickly reacted to the price surge attributed to geopolitical instability. The total traded volume of over 5,400 contracts points to significant market interest, though recent volume has tapered off. This pattern suggests that an early consensus was reached, and conviction remains high, with less trading activity needed to maintain the current price level.
  • Severe geopolitical disruptions in Strait of Hormuz appear ongoing.
  • Critically low U.S. gasoline inventories signal potential supply tightness.
  • Current price trends are driving significant upward pressure on gas prices.
  • Oil futures for Summer 2026 reveal a market in steep backwardation.
  • A Strategic Petroleum Reserve release may decrease domestic gasoline prices.
  • National average gasoline price was volatile in early May 2026.

Current Context

US gas prices are rising due to geopolitical instability. The national average reached $4.54 per gallon on Wednesday, up from $4.536 on Wednesday and $4.457 on Monday [1][2][3]. The median U.S. gas price on May 7 was $4.29 per gallon, a 40-cent increase from the previous week [4]. California continues to face the highest prices at an average of $6.165 per gallon, while Oklahoma ($3.98) and Mississippi ($4.00) report the lowest averages [1][2]. The primary driver for these elevated prices is the ongoing conflict in Iran and the resulting blockage of the Strait of Hormuz, a critical passageway for a fifth of the world's crude oil [3][5].
Global energy markets are experiencing significant volatility and supply concerns. This geopolitical instability has created a historic energy shock, leading to substantial profit increases for major oil companies like ConocoPhillips, Valero Energy, BP, and Shell in the first quarter of 2026, with ExxonMobil and Chevron also projected for growth later in the year [5]. Crude oil markets are reacting sharply to fluctuating geopolitical expectations [6]. Domestically, U.S. oil-product storage levels are critically low, particularly for distillates, which have reached a 20-year low [7]. This, combined with record oil exports, raises concerns about potential domestic diesel and gasoline shortages as the summer travel season approaches [7]. The European Union is preparing a coordinated response to potential jet fuel supply constraints if the Strait of Hormuz blockage persists beyond May [8]. Despite expectations for U.S. shale producers to boost output, with increased rig activity in the Permian Basin, the International Energy Agency (IEA) has revised its global oil demand forecast for the second quarter of 2026, projecting a 1.5 million barrels per day contraction, indicating "demand destruction" due to persistent energy scarcity [9][10].
Future forecasts suggest continued high prices and significant market uncertainty. A prediction market indicates a strong likelihood of the average regular gas price remaining above $4.540 for the week of May 11, 2026 [11][12]. While the U.S. Energy Information Administration (EIA) previously projected U.S. regular retail gasoline prices for May 2026 at $3.638 per gallon, with a 2026 annual average forecast of $3.70 per gallon, expert opinions vary widely [13]. Mark Zandi of Moody's Analytics anticipates gas prices will settle around $3.50 per gallon by the end of 2026, a 50-cent increase from pre-war levels [14]. However, Robert Yawger of Mizuho Securities USA warns that gas prices could reach $5 a gallon, even if the conflict ended immediately, due to problematic U.S. oil-product supply levels [7]. Eric Nuttall of Ninepoint Partners describes the situation as the "worst energy crisis that anybody alive has ever seen" [15]. Some analysts, such as Macquarie Group, predict oil could reach a record high of $200 per barrel if the Middle East war persists until June and the Strait of Hormuz remains closed, with Wood Mackenzie suggesting Brent crude could reach $150 or higher in the coming months [16]. Fitch Ratings also projects that a prolonged period of high oil prices could negatively impact Asia-Pacific downstream oil companies [17]. The next release of the EIA's Short-Term Energy Outlook is scheduled for May 12 [13]. Other industry events in May include the SMR & Advanced Reactor 2026 in Austin, TX, from May 11-12, and various API events [18][19][20][21].
Sources (21)
  1. 1wcnc.com
  2. 2aaa.comgasprices.aaa.com
  3. 3latimes.com
  4. 4stuttgartdailyleader.com
  5. 5theguardian.com
  6. 6stonex.com
  7. 7morningstar.com
  8. 8europa.euenergy.ec.europa.eu
  9. 9spragueenergy.com
  10. 10crestwoodadvisors.com
  11. 11kalshi.com
  12. 12robinhood.com
  13. 13eia.gov
  14. 14cbsnews.com
  15. 15bnnbloomberg.ca
  16. 16zerocarbon-analytics.org
  17. 17fitchratings.com
  18. 18midstreamcalendar.com
  19. 19allstreaminsiders.com
  20. 20downstreamcalendar.com
  21. 21upstreamcalendar.com

2. Price Chart

Historical Price (Probability)

Outcome probability
Date

3. Market Data

Contract Snapshot

This market resolves to "Yes" if the average regular gas price for the United States is strictly greater than $4.540 on May 11, 2026, and "No" otherwise. The outcome is verified using data from AAA. Trading for this market closes on May 10, 2026, at 11:59 PM EDT, with a projected payout on May 11, 2026, at 10:05 AM EDT. Insider trading is prohibited for individuals employed by Source Agencies or those possessing material, non-public information.

Market Discussion

Traders are divided on the direction of US gas prices this week. Arguments for prices rising center on potential supply shortages exacerbated by the Strait of Hormuz closure and the market's current "delusion" about underlying realities. Conversely, those betting on prices dropping or remaining stable cite political statements adding uncertainty and the expectation of a natural end-of-week decline, with no clear consensus emerging.

4. What geopolitical catalysts involving Iran and the Strait of Hormuz could cause a sharp move in oil prices before May 11, 2026?

Global seaborne oil transitOne-fifth via Strait of Hormuz [1][2][3]
Iran formalizes Strait controlMay 7, 2026 [4][5][2][6][7]
Brent crude price (May 7)$100 per barrel [4]
Iran's Strait of Hormuz control poses significant oil price risk. Geopolitical catalysts that could sharply move oil prices primarily involve Iran's aggressive actions in the Strait of Hormuz. As of May 7, 2026, Iran formalized its control over the Strait by establishing the "Persian Gulf Strait Authority" (PGSA), which requires declarations and potentially tolls from vessels, threatening any without permission [4][5][2][6][7]. Aggressive enforcement of this control, such as seizing a commercial vessel or direct confrontation, would severely disrupt shipping and likely cause a rapid spike in oil prices [2]. The Strait of Hormuz has already been largely blocked since February 28, 2026, following U.S.-Israeli military actions against Iran, with a U.S. naval blockade on Iranian ports implemented on April 13 [8][9]. Considering that approximately one-fifth of global seaborne oil typically transits this Strait, any further escalation before May 11, 2026, would have immediate and dramatic effects on oil prices [1][2][3].
Diplomatic failures or military escalations would sharply increase oil prices. A second major catalyst for a sharp move in oil prices is the potential breakdown of diplomatic efforts. A fragile ceasefire between the U.S. and Iran is currently under strain, with ongoing but challenging diplomatic talks mediated by Pakistan [1][10]. While expressing optimism for a deal on May 7, President Trump warned that if Iran rejects the U.S. proposal, military action would resume "at a much higher level and intensity" [4]. The definitive failure of these talks, a return to maximalist demands, or the execution of heightened military threats would lead to a significant upward shift in oil prices [4][10]. The lifting of restrictions by Saudi Arabia and Kuwait on U.S. military access could facilitate such a resumption quickly [11]. Previously, immediate escalation in the region caused Brent crude to surge above $113-$114 per barrel and WTI above $105 per barrel [1][12][13][14], while on May 7, Brent crude was around $100 per barrel [4].
Sources (14)
  1. 1truflation.comblog.truflation.com
  2. 2xtb.com
  3. 3ttnews.com
  4. 4cbsnews.com
  5. 5latimes.com
  6. 6washingtonpost.com
  7. 7theitem.com
  8. 8wikipedia.orgen.wikipedia.org
  9. 9wikipedia.orgen.wikipedia.org
  10. 10aljazeera.com
  11. 11theguardian.com
  12. 12discoveryalert.com.au
  13. 13heygotrade.com
  14. 14youtube.com

5. How do the Q2 2026 gasoline price forecasts from the EIA, Moody's Analytics, and Mizuho Securities differ in their assumptions about the Strait of Hormuz conflict?

EIA Strait of Hormuz Conflict AssumptionDoes not persist past April (EIA Q2 2026 forecast [1])
EIA Full Normalization of TrafficLate 2026 (EIA Q2 2026 forecast [1])
Moody's Analytics Fuel/Oil Pressure OutlookElevated through 2026 (Moody's Analytics [2])
EIA expects the Hormuz conflict to resolve quickly, but recovery will be slow. The U.S. Energy Information Administration's (EIA) Q2 2026 gasoline price forecast is based on the assumption that the Strait of Hormuz conflict will not extend beyond April. The EIA projects a gradual resumption of traffic through the Strait, with pre-conflict levels not expected to be reached until late 2026. This extended adjustment period is modeled to keep gasoline prices elevated into 2026 [1][3].
Moody's and Mizuho foresee sustained elevated prices from Hormuz disruption. In contrast, Moody's Analytics anticipates a "long tail" from the US–Iran conflict, suggesting that even after military operations cease, elevated fuel and oil pressures will persist through 2026. This persistence is attributed to ongoing supply-chain disruptions and damage in the Strait of Hormuz [2]. Mizuho similarly attributes higher oil price expectations for 2026 to the notion that even a brief disruption in the Middle East or the Strait can significantly tighten markets, rendering a drop into the low-$50s negligible [4]. Unlike the EIA, the retrieved sources did not provide a precise Hormuz reopening or throughput timeline for Q2 2026 specifically for Moody's Analytics and Mizuho [4].
Sources (4)
  1. 1Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)eia.gov
  2. 2Moody's Warns of "Long Tail" from US-Iran Conflict: High Oil Prices and Inflation Could Persist Through 2026 — BigGo Financefinance.biggo.com
  3. 3EIA Press Release (04/07/2026): Hormuz closure and related production outages are key drivers in EIA’s latest forecasteia.gov
  4. 4Oil Price Forecasts Raised by UBS, Barclays, Mizuho for 2026-2027 - News and Statistics - IndexBoxindexbox.io

6. What is the market's expectation for future oil prices, according to the price curve for WTI and Brent crude futures contracts expiring in Summer 2026?

Brent July 2026 Futures Price$105.14 per barrel (around May 4, 2026) [1]
J.P. Morgan 2026 Brent Average Forecast$60 per barrel (as of February 27, 2026) [2]
EIA 2027 Brent Average Forecast$76 per barrel [3]
Oil futures for Summer 2026 reveal a market in steep backwardation. The market for WTI and Brent crude futures contracts expiring in Summer 2026 is currently characterized by "steep backwardation," where contracts for immediate delivery are priced higher than those for future delivery. This structure typically indicates an expectation among traders that present tight supply conditions will ease over time [1]. Around May 4, 2026, Brent crude futures showed the July 2026 contract at approximately $105.14 per barrel and the August 2026 contract at $99.59 per barrel. Similarly, WTI crude around the same period saw the June 2026 contract trading at approximately $100.18 per barrel and the July 2026 contract at $95.00 per barrel [1]. This backwardation is largely attributed to immediate supply shocks and ongoing geopolitical risks, particularly those related to the Iran conflict and potential disruptions in the Strait of Hormuz [1][4].
The futures curve suggests future oil supply conditions are expected to ease. Despite current elevated spot prices, the market's overall sentiment, as reflected in the futures curve, anticipates a meaningful resolution to these supply concerns before year-end. This could lead to a return toward pre-war pricing levels by June 2027, with Brent futures for that month trading around $79.85 per barrel [1]. Forecasts from research institutions offer varied perspectives on future pricing. J.P. Morgan Global Research projected Brent crude to average approximately $60 per barrel in 2026, citing soft supply-demand fundamentals while acknowledging geopolitical risks [2]. The U.S. Energy Information Administration (EIA) predicted Brent crude oil spot prices to peak at $115 per barrel in the second quarter of 2026 before easing, ultimately averaging $76 per barrel in 2027 [3].
Recent market movements indicate price sensitivity to geopolitical developments. On May 7, 2026, recent market movements showed June WTI crude (CLM26) at $92.37 per barrel [5] and Brent at $100.895 per barrel [6]. Both prices were lower than earlier in the week, influenced by optimism surrounding a potential US-Iran peace deal [5].
Sources (6)
  1. 1oilpricelive.com
  2. 2jpmorgan.com
  3. 3eia.gov
  4. 4tradingview.com
  5. 5barchart.com
  6. 6tradingeconomics.com

7. How could a release from the U.S. Strategic Petroleum Reserve (SPR) or increased output from the Permian Basin affect domestic gasoline prices by May 2026?

SPR release impact on retail gasoline17–42 cents per gallon [1][2]
AAA national average gasoline price (May 7, 2026)$4.081 [3]
Kalshi market threshold$4.54 [4][5]
A release from the U.S. Strategic Petroleum Reserve (SPR) has the potential to decrease domestic gasoline prices. The U.S. Treasury’s analysis estimated that the 2022 SPR release, which involved 180 million barrels, led to a reduction in retail gasoline prices by approximately 17–42 cents per gallon [1][2]. However, this analysis acknowledged uncertainty, noting that tight refining markets could diminish the extent to which crude price reductions pass through to pump prices [1][2].
Permian Basin output growth faces significant infrastructure constraints. Increased output from the Permian Basin could also exert downward pressure on prices, though its impact may be limited by existing infrastructure and associated-gas/oil takeaway bottlenecks [6]. Restrictions on the movement of associated natural gas can impede the ability to transport crude oil out of the basin, thereby blunting supply-response effects that would otherwise lower gasoline prices [6]. Permian gas pricing conditions can be weak or even negative due to regional infrastructure limitations, suggesting that even substantial Permian crude activity might have a reduced capacity to quickly ease broader gasoline pricing pressures because of local energy bottlenecks [7].
Gasoline price predictions align with specific market benchmarks. The prediction market for gasoline prices is scheduled to resolve on May 11, 2026, using AAA’s national average regular gas price as its benchmark [4][5]. On May 7, 2026, AAA reported the national average for regular gasoline at $4.081, with recent price increases attributed by AAA to surging crude oil prices and geopolitical risks, particularly the Strait of Hormuz closure [3]. One specific market listing establishes a $4.54 threshold for a "Yes" outcome in the "US gas prices this week" market [4][5].
Sources (7)
  1. 1The Price Impact of the Strategic Petroleum Reserve Release | U.S. Department of the Treasuryhome.treasury.gov
  2. 2The Price Impact of the Strategic Petroleum Reserve Release | U.S. Department of the Treasuryhome.treasury.gov
  3. 3AAA Fuel Pricesgasprices.aaa.com
  4. 4US gas prices this week Odds & Predictions 2026 - Kalshikalshi.com
  5. 5May 10, 2026: US gas prices this week Prediction Marketrobinhood.com
  6. 6Permian Basin bottlenecks limit oil output growthmrt.com
  7. 7US Has More Natural Gas Than It Can Use as War Chokes Global Supply | Financial Postfinancialpost.com

8. What does recent weekly EIA data on U.S. gasoline inventories and refinery utilization indicate about domestic supply tightness ahead of the Summer 2026 driving season?

Gasoline Inventory Change WoWdown 2.5 million barrels (week ending May 1, 2026) [1]
Gasoline Inventory vs. 5-year Avg4% below (week ending May 1, 2026) [1]
Gas Price Prediction Market Outlookstrong likelihood of gas prices remaining above threshold [2][1]
U.S. gasoline inventories are below average, signaling potential supply tightness. This situation precedes the Summer 2026 driving season, with recent data from the U.S. Energy Information Administration (EIA) indicating a domestic supply constraint [1]. This aligns with prediction market outlooks suggesting a high probability of elevated gasoline prices [2].
Total gasoline inventories declined, falling below the five-year average. For the week concluding May 1, 2026, the EIA reported a decrease of 2.5 million barrels in total motor gasoline inventories from the previous week [1]. This placed overall stocks 4% below the five-year average for this period, remaining outside the typical seasonal range [1]. While finished gasoline saw an increase during this week, a decrease in blending components contributed to the overall gasoline stock reduction [1].
Refinery utilization increased, but overall gasoline supply remains tight. U.S. refineries operated at 90.1% of their operable capacity for the week ending May 1, 2026, marking an increase from 89.6% the prior week [1]. This level of activity generally supports supply throughput; however, despite this uptick, the sustained below-average gasoline stocks continue to indicate domestic supply tightness [1]. This consistent tightness aligns with prediction market outlooks for U.S. gas prices, which anticipate elevated levels [2].
Sources (2)
  1. 1https://www.eia.gov/petroleum/supply/weekly/pdf/highlights.pdfeia.gov
  2. 2US gas prices this week Odds & Predictions 2026kalshi.com

9. What Could Change the Odds

Key Catalysts

AAA’s national regular gasoline average was reported as $4.081 for 5/7/26 and approximately $4.300 on 5/5/26, indicating the pump price is back above ~$4.3 in early May 2026 and volatile with crude over $100 and Strait of Hormuz constraints [1][2]. The immediate bullish or bearish line for this week’s sentiment centers on thresholds around mid-$4s, as a prediction-market contract for May 11, 2026, resolves based on whether AAA’s national average regular gas price is strictly greater than $4.540 on May 11, 2026 [3].
OPEC+ agreed to raise output targets by 188,000 bpd starting in June as part of “market stability” [4]. However, this may be largely symbolic because Iran’s chokehold/closure of the Strait of Hormuz continues to disrupt Persian Gulf exports [4][5]. OPEC+ also plans to meet again on June 7 [4]. Despite near-term volatility, the EIA forecasts that retail U.S. gasoline prices will be lower in 2026 than 2025, down 6%, even as volatility can persist due to refinery capacity and costs [6]. This frames longer-term baseline bearishness despite week-to-week spikes [6].

Key Dates & Catalysts

  • Strike Date: May 11, 2026
  • Expiration: May 18, 2026
  • Closes: May 11, 2026
Sources (6)
  1. 1AAA Fuel Pricesgasprices.aaa.com
  2. 2AAA Fuel Pricesgasprices.aaa.com
  3. 3US gas prices this week Odds & Predictions 2026 - Kalshikalshi.com
  4. 4OPEC+ agrees to June oil production hike, may end up largely on paperbairdmaritime.com
  5. 5OPEC+ Countries Agree Modest Rise in Production as Iran Retains Chokehold on Key Strait of Hormuzdtnpf.com
  6. 6EIA expects lower gasoline prices in 2026 and 2027 as crude oil prices fall - U.S. Energy Information Administration (EIA)eia.gov

11. Historical Resolutions

Historical Resolutions: 20 markets in this series

Outcomes: 9 resolved YES, 11 resolved NO

Recent resolutions:

  • KXAAAGASW-26MAY04-4.470: NO (May 04, 2026)
  • KXAAAGASW-26MAY04-4.450: YES (May 04, 2026)
  • KXAAAGASW-26MAY04-4.640: NO (May 04, 2026)
  • KXAAAGASW-26MAY04-4.620: NO (May 04, 2026)
  • KXAAAGASW-26MAY04-4.600: NO (May 04, 2026)