“Drivers hopeful that the U.S.-Iran framework deal will translate to lower gasoline prices will probably have to wait weeks, or longer, to see meaningful improvement,” the New York Times reports.
“Energy analysts refer to the swing of prices as ‘up like a rocket, down like a feather’ — a phenomenon that means gasoline costs quickly rise alongside the price of crude oil but are slow to follow its descent.”
New York Times: “The long-awaited deal to reopen the Strait of Hormuz brought quick relief to the oil market, sending prices to their lowest levels since early March.”
“Getting substantial amounts of oil and gas flowing, however, will take much longer.”
“It can take weeks or months, even in the best of times, to get oil and gas from wells in the Persian Gulf to buyers in China or Japan.”
Los Angeles Times: “As inflation rates rise to their highest in years, Californians are again getting hit the hardest at the gas pumps, with a regular tank costing upwards of $100 at some stations in Los Angeles.”
“Inflation figures released this week show consumer and producer price rises at more than three-year highs, driven by the energy crisis stemming from the war with Iran.”
New York Times: “Democrats and environmentalists are shifting their approach to climate change, as the economic fallout from war in the Middle East has reshuffled the politics of energy.”
“With voters worried about spiking gas prices and inflation, some of the party’s leaders argue that they should stop trying to throttle oil and gas, which heat the planet when burned. It’s a rejection of the approach taken during the Biden administration, which treated climate change as an existential threat and tried to stop new drilling and pipelines.”
Bloomberg: “Another tanker appears to have been struck in the Gulf of Oman, following attacks by the US on two other vessels in the area earlier this week.”
Washington Post: “Oil and gas executives have warned the White House that gasoline prices could surge in coming months as fuel inventories fall to critical lows, complicating the Trump administration’s efforts to contain inflation that has already rattled American consumers.”
“Industry officials say they are doing everything they can to sound an alarm that prices are about to soar as the commercial and government inventories that have mitigated price rises so far are rapidly depleting… Some inventories could be wiped out within weeks.”
“A sharp fall in China’s crude oil imports during the Iran war has been instrumental in holding down oil prices and keeping the global economy humming,” the Wall Street Journal reports.
“Clues are emerging in the mystery of the missing three million barrels—the oil that China would normally be importing but isn’t now. Chinese people are driving fewer gasoline-powered cars and taking trains instead of planes. The country is dialing back operations at the plants that turn crude oil into feedstock for materials such as plastics. And Beijing is beginning to draw down reserves.”
“The question is how long the import cuts can last—and what would happen if China needs to start buying more again.”
New York Times: “The monthslong closure of the Strait of Hormuz is reinforcing an expensive geopolitical lesson about how risky it can be to rely on imported energy.”
“From South America to Southeast Asia, governments and private companies are being forced to look inward and take steps to harness what they can domestically, even when doing so raises upfront costs. Call it the era of me-first energy.”
Wall Street Journal: “For decades, the Persian Gulf’s energy map converged on a single chokepoint: the Strait of Hormuz. Now, spurred by the Iran war, the region’s petrostates are rushing to draw new lines to circumvent it.”
“Across the Gulf, governments are pouring billions into new oil pipelines, rail corridors and energy storage hubs to bypass the waterway in what is set to become one of the most durable outcomes of the conflict. The new energy links are part of a broader redrawing of the region’s logistics map, shifting trade toward trucking, rail and new ports.”
Bloomberg: “President Donald Trump is preparing to use Cold War-era authorities to dole hundreds of millions of federal dollars to support coal-fired electricity as well as US exports of the fossil fuel.”
“Trump is expected to announce he’s delivering the funding for US coal plants and an American export terminal under the 1950 Defense Production Act during an Oval Office event Thursday.”
Bloomberg: “A month has now passed since Donald Trump announced an indefinite ceasefire with Iran, and the tense stalemate looms over the start of Americans’ summer travel season, with no end in sight.”
“Heading into a holiday weekend in which 45 million people in the US plan to travel (and 87% by car), the average gallon of gas was up to $4.55 on Friday, according to AAA. It’s 42% higher than a year ago, and could keep going.”
“That’s economic and political pressure all in one, and the endgame remains elusive.”
“President Donald Trump’s war threatens to push gas prices past the record high under former President Joe Biden. They aren’t the only numbers the White House staff is sweating,” Politico reports.
“While record high prices at the pump are a persistent concern, the bond market’s spike over the last several days also has aides and allies fretting, worried that borrowing costs will pummel a nation that runs on credit and make it harder for the Federal Reserve to cut rates.”
“The two moving in tandem are a double whammy for a White House working to assuage voters’ cost-of-living concerns ahead of an expected difficult midterm election.”
“Oil prices jumped Thursday on a report that Iran’s supreme leader will not allow the country’s enriched uranium to be shipped abroad, a position that will likely complicate peace talks with the U.S.,” CNBC reports.
GasBuddy predicts another big spike in gas prices next week — up from $4.56 a gallon — if President Trump doesn’t figure out a way to open the Strait of Hormuz.
“All 50 states have average gas prices above $4 a gallon, AAA said Wednesday, with seven now topping $5 a gallon,” Axios reports.
Robert Pape looks at the likelihood of the next global economic shock
“First, inventories. Watch U.S. East Coast diesel inventories, European LNG storage levels, and Asian jet fuel reserves. U.S. distillate inventories are already running roughly 11–18 percent below seasonal norms, while European gas storage remains near 30–35 percent full — far below the roughly 55 percent level Europe normally enters summer with. Historically, once inventories fall below roughly 20–25 days of forward demand coverage, governments begin losing the ability to stabilize shortages through temporary releases and subsidies alone.”
“Second, industrial slowdown. Watch for refinery utilization cuts in India and South Korea, fertilizer shutdowns tied to LNG shortages, falling container freight volumes, and airline route reductions across Asia and Europe. If major Asian refiners begin reducing throughput by 10–15 percent, or if airlines begin cutting summer schedules by another 5–10 percent because of jet fuel shortages rather than weak demand, the crisis has likely entered synchronized contraction.”
“Third, political intervention. Export controls, diesel allocation programs, anti-price-gouging measures, emergency food subsidies, and fuel rationing indicate governments are entering the political phase of the crisis. Early warning signs include limits on diesel purchases, restrictions on fertilizer exports, government fuel-allocation orders, and emergency price caps spreading across multiple countries simultaneously.”
Wall Street Journal: “For now, the U.S. has been able to meet needs at home and replace some of the missing Gulf barrels. No nation in the world’s history has ever exported as much energy: It shipped 14.2 million barrels of crude and products a day late last month—the rough equivalent of one out of seven barrels consumed globally in ordinary times.”
“But trouble is brewing. U.S. oil producers are barely stepping up their output, refineries are running at full-throttle, and domestic stocks are getting depleted fast. The upshot: American consumers are set to keep paying more for fuel to stay inside the U.S.’s borders.”
The Economist: “The largest supply shock in petroleum history is getting larger fast. Some 2 billion barrels, or 5% of the world’s yearly oil supply, have already been lost because the Strait of Hormuz is shut. Every day it remains closed the deficit grows by 14 million barrels. Since peace talks between America and Iran have stalled, a reopening still seems many days away.”
“Yet oil markets look strangely calm. Brent crude futures, at $105 a barrel, have fallen from April highs of nearly $120. They remain below the peak of $129 in 2022, after Russia invaded Ukraine. Spot prices have slid even more, implying that crude oil is more plentiful than it was earlier in the war. The surprising mini-glut is real—but do not take too much comfort from it. A full-blown energy disaster may be weeks away.”
Taegan Goddard
Taegan Goddard is the founder of Political Wire -- which for more than two decades has been one of the nation's most influential political news sites.
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