Could Middle East Conflict Lead to Gasoline Shortages in the USA?

Could the Middle East conflict lead to gasoline shortages in the United States? And what would a gasoline shortage in the U.S. mean for U.S. gasoline prices?

These were the questions Rigzone posed to Jorge Molinero, a Commodity Owner at commodity analytics company Sparta, which notes on its website that it provides “real-time, actionable market intelligence”.

“The Middle East conflict has already been impacting gasoline prices in recent days, pushing spreads and cracks higher across all geographies,” Molinero told Rigzone on Friday, responding to the questions, adding that “the clearest effect has been seen in the Sing 92 crack in Asia”.

“Although the geopolitical premium could be transferred to the U.S., the region is not dependent on gasoline imports from the Middle East, making the risk of a shortage affecting the American balance unlikely,” Molinero went on to state.  

“Currently, the arbitrage from Europe, the main source of gasoline imports to NYH, is closed, and PADD 1 inventories are above both the historical average and the last three years’ levels, so in the short term, there is no sign of a shortage risk,” he continued.

Molinero told Rigzone that “the main short-term effect is bullish for the Sing 92 and especially for the E/W, which is currently at historic lows for the November contract, discounting the post-pandemic years, as the threat of a product shortage would have a greater impact on the East of Suez balance than the West”.

In a market analysis sent to Rigzone on Friday, Rania Gule, a Senior Market Analyst at XS.com, warned that “there are direct spillover effects on gasoline prices due to the potential for strikes on Iranian oil fields”.

“As talk of supply disruptions intensifies, we may see a rise in gasoline prices, which could directly affect consumers worldwide,” Gule added in the analysis.

In a research note sent to Rigzone by the JPM Commodities Research team on Friday, analysts at J.P. Morgan said, “we assume that attacking Iran’s energy facilities would not be Israel’s preferred course of action, but rather a secondary or even tertiary response to Iran’s possible escalation”.

“We also assign a low probability to the scenario where Iran targets energy flows from Gulf Arab states, given the recently upgraded diplomatic ties with GCC countries,” the analysts added in the note.

The latest gasoline fuel update from the U.S. Energy Information Administration (EIA) at the time of writing, which was released on September 30, shows that U.S. regular gasoline prices averaged $3.180 per gallon on September 16, $3.185 per gallon on September 23, and $3.179 per gallon on September 30. The EIA’s next gasoline fuel update is scheduled to be released today.

According to the AAA Gas Prices website, regular gasoline prices in the U.S. are averaging $3.174 per gallon on Monday. Yesterday’s average was $3.173 per gallon, the week ago average was $3.216 per gallon, the month ago average was $3.281 per gallon, and the year ago average was $3.722 per gallon, the site outlined.

Regular unleaded gas prices in the U.S. were averaging $3.135 per gallon as of 7.25am on October 7, according to a live ticking average on GasBuddy’s website, which highlighted that this figure was 0.3 cents up from yesterday’s average, 6.4 cents down from last week’s average, 11.2 cents down from last month’s average, and 55.9 cents down from last year’s average.

In its latest short term energy outlook (STEO), which was released last month, the EIA projected that the regular gasoline price will average $3.33 per gallon in 2024 and $3.29 per gallon in 2025.

In its previous August STEO, the EIA projected that the regular gasoline price would average $3.38 per gallon in 2024 and $3.33 per gallon in 2025. The EIA’s next STEO is scheduled to be released on Tuesday.

To contact the author, email andreas.exarheas@rigzone.com