Oil prices are near their highest level since 2022, but American drivers are seeing something very different at the pump. Brent crude settled Monday at $110.74, up from $102.31 at the start of October, and spot prices briefly traded above $116, the highest since June 2022. Yet the national average for gasoline has fallen for four straight weeks to $4.2858, well below the year’s high of $4.564 set in May.
Kalshi is giving gas a 35% chance of reaching $4.60 before December 31. That would require a 31-cent increase over the next nine weeks, while prices are moving the other way. The question is whether the oil rally eventually lifts gasoline, or whether the market is pricing a geopolitical shock that may never happen.
Why Oil Prices Are Rising While Gas Prices Fall
Normally, an $8.43 rise in crude would add roughly 20 cents per gallon in raw oil costs. Instead, gasoline has fallen more than 12 cents over the same period. Much of that disconnect comes from the gasoline crack spread, the gap between crude oil and wholesale gasoline prices.
Gasoline futures are trading around $3.15 per gallon, putting the crack spread near $21 per barrel. That compares with roughly $38 in early September and $58 at the end of August. Higher crude costs have been absorbed by a much narrower refining margin rather than passed directly to consumers.
What Would Push Gas Prices Above $4.60?
At today’s relationship between wholesale gasoline and pump prices, gasoline futures would need to reach about $3.46 to push the national average above $4.60. That could happen in two ways:
- Brent climbs toward $124 while refining spreads stay unchanged.
- Brent holds near current levels while the gasoline crack recovers toward $34 per barrel.
Neither looks compelling heading into winter. Gasoline demand typically weakens, and refineries returning from seasonal maintenance can add supply. The EIA’s October outlook supports that view, forecasting Brent around $105 in the fourth quarter and gasoline prices gradually declining.
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Gas Price Odds: What the Kalshi Market Is Pricing
Kalshi’s year-end contracts settle on the highest AAA national daily average recorded in 2026, so gas only needs to cross a strike once to pay out.
The $4.60 contract is the most actively traded, with roughly $9,500 in volume over the last 24 hours and more than 186,000 contracts of open interest.
The market barely distinguishes between a moderate increase and a large spike. If gas reaches $4.60, current prices imply roughly a two-thirds chance it also clears $5.00. Traders aren’t necessarily expecting a gradual climb; they’re assigning meaningful probability to a much bigger move.
A shorter-term Kalshi market suggests the national average could be closer to $4.22 by October 31. If so, gasoline would need to climb nearly 40 cents in November and December just to clear the lowest unsettled year-end strike.
The Biggest Risk to Oil Prices: The Middle East
One scenario could change everything: another major disruption to oil supplies. Diplomatic discussions involving Saudi Arabia, Pakistan, Turkey and Iran are continuing, but tensions remain elevated. Houthi drone interceptions and the possibility of renewed U.S. strikes on Iran leave energy markets exposed to a sudden escalation. The EIA’s October forecast already assumes 4.5 million barrels per day of Gulf production stays offline through the quarter.
A further disruption could push crude and gasoline futures higher together, overwhelming the seasonal factors keeping pump prices down. That explains the shape of Kalshi’s ladder: a 35% chance of $4.60 but still about 23% for $5.00. Traders appear to be pricing an oil shock more than a normal seasonal recovery.
Even so, there is little evidence yet of a sustained rebound in retail gasoline. Crude has rallied significantly without pulling gas higher, and the remaining weeks of the year generally favor weaker demand.
The Trade: Buying “No” on $4.60 Gas at 67¢
This section reflects the author’s opinion, not financial advice.
I favor No on gasoline exceeding $4.60 before year-end, currently available around 67 cents. Gas prices are still declining despite Brent’s rally, refining spreads have compressed sharply, and the seasonal demand picture weakens into November.
The biggest risk is geopolitical. A fresh round of strikes affecting Gulf production or refining infrastructure could quickly change the outlook.
Oil Prices FAQ
What is the price of oil today?
Brent crude settled Monday, October 26, at $110.74 per barrel, up from $102.31 at the beginning of October. Check a live quote for the current price.
Why aren’t gas prices rising with oil prices?
Refining margins have narrowed sharply. The gasoline crack spread is near $21 per barrel, down from about $58 at the end of August, so higher crude costs are being absorbed before they reach the pump.
Where are gas prices headed?
The EIA forecasts Brent near $105 in the fourth quarter and gradually declining gasoline prices. A major Middle East supply disruption is the main risk to that outlook.
