by Bryan Perry
May 5, 2026
Stocks delivered a robust performance during the month of April, with the major averages trading at new all-time highs and posting some of the strongest gains we’ve seen in years. This bullish momentum was powered by rising earnings, primarily tied to the AI space, which has created positive investor sentiment.
With that said, market sector leadership remains concentrated in technology, industrial, and consumer-related stocks. Geopolitical developments are a constant headwind, with the market’s direction in the post-earnings reporting season hinging on how the Iran conflict plays out, especially regarding the fate of the Strait of Hormuz, plus inflation trends that are being impacted by higher oil prices and at the pump.
It’s a frustrating contradiction to see the average price of a gallon of gasoline reach a national average of $4.44 (as of May 3, 2026), while also constantly hearing the U.S. is “energy independent.” This disconnect comes down to how energy independence is defined versus how the global oil market actually functions. So, with plenty of oil at home, why haven’t Americans been shielded from these price hikes?
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
As a fungible global commodity, oil is priced the same worldwide. Even if every drop of gas in your car came from North Dakota, the price of that oil is set on the global market. When the Middle Eastern supply is threatened, the price goes up for everyone, regardless of where the oil is physically pumped.
Even though the administration has doubled down on their “drill, baby, drill” initiatives and reopened federal lands to increased domestic supply, oil production is a slow-developing process. It takes months or years for new drilling permits to turn into actual gasoline at the local station.
In short, the price of oil is a factor of global supply and demand, not just domestic supply. When the Trump administration speaks of energy independence, they usually refer to being a major producer and a net exporter. This means the U.S. produces more total energy (oil, natural gas, coal) than it consumes.
However, the U.S. still imports millions of barrels of oil every day. Many U.S. refineries are specifically designed to process imported heavy crude (like oil from Canada or the Middle East), while the light crude we drill in Texas is often sent abroad. This means we are still physically tied to the global supply chains.
In the meantime, the government is exploring short-term fixes, such as suspending the 18.4-cent federal gas tax to provide immediate relief, while also considering tapping the Strategic Reserve, as previous oil releases have temporarily helped pricing. Even if both measures are activated, the effect will be short-term. Tapping the Strategic Petroleum Reserve (SPR) would provide only minor relief. Based on the current market and historical data, massive releases from the reserve (like the 180-million-barrel release in 2022) are estimated by the Treasury Department to lower gas prices by a range of 13 to 31-cents a gallon.
The SPR is currently undergoing its most aggressive draw-down in history, as President Trump authorized a massive 172-million-barrel draw-down. This is the fastest release rate in the Reserve’s 50-year history.
As of Sunday, May 3, 2026, the reserve has dipped below the critical 400-million-barrel (mb) mark. Crossing below 400-million barrels is psychologically significant. The last time levels were this low was during the 1983 energy crisis. At current U.S. consumption levels (20 mb/d), a 385 mb reserve represents just 19 days of total oil demand, if all imports were frozen. While the SPR stands at 385 mb, private companies (commercial stocks) hold another 459 mb, so total U.S. crude on hand is roughly 844-million barrels, which is why America hasn’t seen actual gas shortages or gas lines, despite the high prices.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
In a best-case scenario, if the latest SPR release is coordinated with our international allies, the surge in supply could knock prices down by as much as 40-cents, but only temporarily. In a worst-case scenario, if the market views such a large release as a drop in the bucket compared to the disruptions in the Strait of Hormuz, the price may drop by only 10 to 15-cents – or simply stop rising further.
Theoretically, dumping millions of barrels of oil should slash prices, but two main fundamental realities prevent that. Because oil is traded globally, a U.S. release will lower the global price of Brent and WTI crude, but only on a relative basis. Even if the U.S. adds a million barrels a day to exports, global demand is over 100 million barrels a day, so we are essentially fighting a global fire with one large garden hose.
Additionally, such releases are in the form of crude oil, not gasoline. Crude oil must then be sent to a refinery, turned into gas, and trucked to gas stations. If refineries max out at 95% capacity, adding more crude doesn’t necessarily mean more gas will quickly emerge on the other side. As of late April, and early May 2026, U.S. refineries are operating at a national average capacity of approximately 89.6%.
In a normal oil market, the world uses roughly 104-million barrels a day (mb/d). However, the current war and resulting price spikes have actually caused a demand decline, a situation where people stop driving or businesses cut back because gas is too expensive, dropping energy usage slightly. Due to the bombings of neighboring oil producing nations and the closure of the Strait of Hormuz, supply has cratered to around 98.4 mb/d. As a result, the world is currently facing a massive (six-million barrel per day) deficit.
Analysts from JPMorgan and Goldman Sachs have warned if the Strait isn’t fully open by mid-May, oil will likely breach $150 per barrel, which would push U.S. gas toward a $6.00 national average. Before oil prices risk trading sharply higher, the Trump administration needs to take out Iran’s IRGC regime and reopen the Strait under U.S. supervision to bring down sky-high shipping insurance premiums.
The administration is under immense pressure because energy independence on paper isn’t stopping the rise to over $4.40 gas prices at home. The current strategy to use the SPR is a bridge, but that key reserve is disappearing at a record pace. The rising consensus in Washington is that unless the U.S. can effectively control the security of the Strait and neutralize the IRGC’s ability to harass shipping, the global economy that depends on that strategic supply of oil faces the risk of recession by Q3 2026.
This sounds like we’re entering “crunch time” in the Iran crisis and in the oil market.
All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
The Ghost of Jerome Powell Still Haunts the Fed
Income Mail by Bryan Perry
The Current Crisis in the Oil Market
Growth Mail by Gary Alexander
Happy Birthday, Karl Marx: When Will Your Ideas Disappear?
Global Mail by Ivan Martchev
The Stock Market Has Assumed the Iran War is Over
Sector Spotlight by Jason Bodner
Rare Earth Minerals Better Become Less Rare…Fast
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Bryan Perry
SENIOR DIRECTOR
Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.
Bryan’s financial services career spanning the past three decades includes over 20-years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry
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