Diesel at $6.40 a gallon is a record. A year ago the same fuel sold for $3.70. Gasoline is not far behind: AAA put the national average at $4.44 per gallon on Sept. 17, up 38.7% from a year earlier.
Crude oil is behind the climb. Brent went back above $100 a barrel on Sept. 9 for the first time since May 22, gaining more than 3% in a single session.
What pushed Brent over $100
The trigger was Hormuz. After the United States targeted five Iranian oil tankers, Iran’s Islamic Revolutionary Guard Corps said it hit two American vessels and eight tankers in the strait on Sept. 9. Strikes on energy facilities in Saudi Arabia came the same day.
Then Saudi Arabia’s East-West Pipeline went offline. The line is the kingdom’s alternative to shipping through Hormuz, and word that its shutdown would hold up deliveries to some refineries sent Brent up more than 6%, to $107.63 a barrel. According to market sources, some September cargoes bound for Europe were canceled on Sept. 15. Up to 4% of global oil supply could be at risk if the outage drags on.
Prices at the pump, and at the Fed
August consumer prices rose 0.4% from July and 3.4% from a year earlier. Gasoline, up 3.9%, accounted for more than a third of the monthly gain.
The Federal Reserve responded on Wednesday with a quarter-point increase, lifting its policy rate to a range of 3.75%-4%. It was the first hike since 2023. A rate rise does nothing for tanker traffic, but it makes borrowing dearer and strengthens the dollar. A stronger dollar makes oil costlier for buyers paying in other currencies, which can cool global demand and hold back further price gains.
Politics before the midterms
With the Nov. 3 congressional midterms close, the White House is under pressure to bring energy costs down. It is weighing the Defense Production Act as a way to expand U.S. refining capacity.
President Donald Trump has a message for voters and for traders. On Sept. 9, as oil climbed back above $100, he argued the war with Iran would end right after the midterms. He said Iran was trying to influence the elections, that the U.S. Navy had “full control” of the Strait of Hormuz, and that many tankers still passed through it each day. Gasoline prices, he added, would fall once the fighting stopped.
On Sept. 14 he said Iran wanted a deal with Washington “quickly and very eagerly.” Brent jumped about 5% to $109.80 during the session, then surrendered most of that after his comments and finished 1% higher at $105.68. Iran’s reply was that no talks would happen until its conditions were met.
In the House of Representatives, an effort to pull American forces out of the conflict is still pending as lawmakers argue over the war’s cost.
