Since the Iran conflict began US retail fuel has surged: AAA shows regular
gasoline about 25% higher YoY at $3.80/gal and diesel up 30% at $4.80/gal. Crude
has eased recently, but uncertainty around the Strait of Hormuz is likely to
keep refined fuel prices firm because additional Gulf crude supply takes time to
reach product markets. Analysts point to limited refining capacity widening the
crude–product spread; Enverus analyst Carl Larry says refinery bottlenecks mean
product prices will remain elevated. Global fuel supply is further strained
after Ukrainian drone strikes on Russian refineries triggered a severe domestic
fuel shortage and Moscow subsequently banned diesel exports; Russia had been the
world’s No.2 diesel exporter. University of Houston energy researcher Ed Hirs
says current volatility is creating price premia and higher costs.
