Despite improvements in oil exports from the Middle East and increased tanker traffic in the Strait of Hormuz, gasoline and diesel prices remain stubbornly high, with gas prices above $4.30 per gallon and diesel nearing an all-time peak. This disconnect between recovering oil supply and sustained consumer costs has drawn attention from analysts, particularly as the United States approaches midterm elections.
Private tracking firm Kpler reported that oil exports from the Gulf, excluding Iran, have largely returned to pre-war levels. Approximately 40% of crude oil from the region now bypasses the Strait of Hormuz, a significant adjustment in the supply chain. Tanker traffic within the strait has also seen considerable improvement from earlier lows, further bolstering regional exports.
Analysts attribute the persistent high prices to several factors. Lingering disruptions in the region have forced oil companies to adopt more costly transportation methods, expenses that are ultimately passed on to retailers and consumers. Traders also express skepticism about the long-term stability of the current Middle Eastern supply, which keeps crude prices elevated beyond what the volume of oil flow might otherwise suggest.
Furthermore, oil traders and analysts note that fuel prices typically adjust to falling oil costs with a delay. Retailers need time to sell through refined products that were purchased when oil prices were higher. "When prices are fluctuating, gas stations want to protect their profit margin. They don't want to cut prices too quickly," explained Christopher Tang, a professor of supply chain management at the University of California.
The elevated cost of transporting crude oil also contributes to higher prices. Tankers are employing ship-to-ship transfers to evade potential attacks, a method that increases expenses. Some tanker captains are also commanding significantly higher pay due to the perceived danger, with base salaries reportedly reaching $100,000 per month plus bonuses, a substantial increase from the typical $15,000 monthly rate.
Uncertainty surrounding the ongoing conflict in the region also plays a role. Concerns about potential escalations or attacks on oil infrastructure continue to influence market prices. The temporary closure of Saudi Arabia's East-West pipeline last month, following an attack by Iran-aligned Houthi militants, highlights these market jitters. Although exports through the pipeline have been restored, anxieties persist regarding future attacks on the pipeline or tankers in the Bab el-Mandeb Strait.
"Markets hate uncertainty. If there’s this overall feeling things could get bad again very quickly, we're seeing that market price that in," said Hugh Daigle, a professor at the University of Texas at Austin who studies petroleum.
While the U.S. imports a relatively small amount of crude from the Middle East, oil and gas are traded on a global market. Consequently, supply disruptions in the region impact prices worldwide, including for American drivers. The average price of a gallon of gas in the U.S. currently stands at $4.36, a 21-cent decrease over the past month but still 46% higher than pre-war levels. West Texas Intermediate futures, the benchmark for U.S. trading, are trading around $92 per barrel, a roughly 9% drop since mid-September but over 40% higher than pre-war figures.