Oil prices are down, but substantial relief at the pump could be a long way off, experts say
Oil prices are down, as are gasoline prices.
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prices → say → pump
Should American drivers see $3 gasoline again, it will be well after 2027, experts say.
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experts → see → 2027
The price of oil took a tumble beginning at the end of October, and the decrease accelerated following the midterm elections in early November.
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decrease → take → November
Gasoline prices in the U.S. also dropped this week, falling below $4 per gallon for the first time since July.
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prices → drop → July
Going into the weekend, the average price for a gallon of gasoline in America was $3.87 per gallon, down from $4.07 per gallon a week ago, according to AAA.
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price → go → AAA
However, the price remains well above the $3.08 per gallon it was at a year ago, and experts say that an elevated price is likely to continue through 2027.
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price → remain → 2027
Investors are likely betting that diplomacy will help bring about an end to the U.S.-Israeli war with Iran, but hostilities continue in some parts of the Middle East.
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hostilities → bet → East
Iran’s military claimed Thursday to have struck four oil tankers that had ignored warnings, Reuters reported, noting the claims couldn’t be verified.
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claims → claim → warnings
Yemen’s Iran-backed Houthis said Thursday they attacked a pumping station on the Saudi East-West oil pipeline, which is used as an alternative route around the Strait of Hormuz, the newswire service also reported.
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service → back → Hormuz
The ongoing inability of the U.S., Israel, or Saudi Arabia to exert control over the Houthis and contain these attacks remains one of the more suspicious aspects of what is happening in the Middle East today,” David Blackmon, energy analyst, wrote on his “Energy Additions” Subtack.
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Blackmon → exert → Subtack
The International Energy Agency’s (IEA) November Oil Market Report released on Friday says the global oil supply rose by another 2.3 million barrels per day in October, to 105.4 million barrels per day.
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supply → release → day
Bloomberg estimates that exports from the Gulf region, excluding Oman, are about 74% of pre-war levels.
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exports → estimate → levels
Blackmon pointed out that continuing improvement from the Gulf is far from certain.
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improvement → point → Gulf
When the route around the strait is under attack, the 74% recovery is vulnerable to the next drone strike, whenever that may come, he wrote.
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he → come → strike
The U.S.-Israel war with Iran that began in late February resulted in rocket attacks on vessels in the Strait of Hormuz, effectively closing the passageway for a quarter of global seaborne oil trade and significant volumes of liquefied natural gas and fertilizers.
Fuel prices to remain high
Patrick De Haan, head of petroleum analysis for GasBuddy, wrote in his “Fuel Insights” Substack that it’s a myth that the outcomes in the midterms had much to do with dropping gasoline prices.
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outcomes → begin → prices
“Gas prices have fallen in the 30 days leading up to the election every year since 2006 except 2010, and it’s typically seasonal: refiners finish maintenance and ramp up output just as demand fades with cooler weather.
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demand → fall → weather
Those same forces, along with more oil moving through the Strait of Hormuz, are why prices could stay below $4 in the weeks ahead,” De Haan wrote.
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Haan → move → weeks
The U.S. Energy Information Administration (EIA) released its “Short-Term Energy Outlook” this week.
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Administration → release → Outlook
While the agency expects the retail price of gasoline and diesel to decline in 2027, it raised its forecast from last month’s outlook, to $5.03 per gallon for diesel in 2027, a 12% increase over the previous month’s forecast.
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it → expect → forecast
Gasoline prices are forecast to average $3.73 per gallon, a 5% increase over the previous month’s forecast.
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prices → forecast → forecast
“We now assume global petroleum product markets will face continued supply constraints through the end of 2027,” the EIA said.
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EIA → assume → 2027
Refinery capacity is limited
This will, the EIA says, support a wider petroleum product crack spread, incentivizing elevated U.S. refinery operations.
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EIA → limit → operations
The crack spread is the difference between a barrel of crude oil and the petroleum products refined from it, such as gasoline and diesel.
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spread → refine → gasoline
Blackmon wrote that U.S. inventories of refined products are 8% below the five-year average.
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inventories → write → average
The EIA’s weekly distillate series shows distillate fuel-oil stocks for the first week of November are lower than they’ve been since records began in 1982.
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records → show → 1982
Besides low inventories, U.S. refineries ran at 95.2% of operable capacity last week.
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refineries → run → capacity
They are running about as hard as they physically can, and the diesel shelves are still the barest in more than 40 years for this point in the season,” Blackmon wrote.
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Blackmon → run → season
Emergency stocks will provide temporary relief, but a long-term fix requires more refining capacity.
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fix → provide → capacity
The last major refinery in the U.S. was built in 1976, and even if planning for one started today, it would be several years at least before it was brought online.
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it → build → one
Ultimately, all these factors combined will keep fuel costs above what they were prior to the conflict in Iran for the foreseeable future.
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they → combine → future
The Aporia
