Why are gas prices still high even as traffic improves in the Strait of Hormuz?
asserted
traffic → improve → Hormuz
Gas prices stand above $4.30, marking an increase of 46% from pre-war levels.
asserted
prices → stand → levels
Oil exports from the Middle East have improved substantially in recent weeks, according to a post on X from private tracking firm Kpler, but gas prices still stand above $4.30, and diesel prices remain close to an all-time high.
The supply of oil from the Gulf, excluding Iran, has returned to where it stood before the Iran war, Kpler said last week.
uncertain
Kpler → improve → war
Roughly four of every 10 barrels of crude now exit the region without going through the Strait of Hormuz, an adjustment in the oil supply chain, Kpler added.
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Kpler → exit → chain
At the same time, Kpler said on Wednesday, tanker traffic in the strait has improved significantly from a low point earlier in the war, bolstering exports from the region.
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traffic → say → region
The apparent disconnect between a recovery in oil supply and stubborn fuel prices has drawn attention from analysts.
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disconnect → draw → analysts
The dynamics behind gas prices have garnered added urgency as the United States hurtles toward midterm elections in less than a month.
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States → garner → month
"Aren't we all trying to figure that out?" Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth, told ABC News.
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Pappalardo → try → News
Analysts who spoke to ABC News attributed persistently high gas prices to lingering disruption in the region, which has forced firms to take up costly means of transporting crude and pass along those expenses to retailers.
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which → speak → retailers
Oil traders, meanwhile, question the staying power of newfound Middle Eastern supply, keeping crude prices higher than the level of oil flow may otherwise suggest, they said.
uncertain
they → question → flow
Investors fear a potential resumption of large-scale fighting in the strait or attacks on oil infrastructure in the region, some analysts said.
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analysts → fear → region
Plus, analysts added, gas prices typically drop at a delayed pace in response to any reduction in oil prices, in part because it takes time for retailers to sell through refined product purchased while oil prices were at higher levels.
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prices → add → levels
"When prices are fluctuating, gas stations want to protect their profit margin.
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stations → fluctuate → margin
They don't want to cut prices too quickly," Christopher Tang, a professor of supply chain management at the University of California, told ABC News.
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Tang → want → News
The U.S. -- the world's largest oil producer -- imports a small amount of crude from the Middle East.
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U.S. → import → East
Since oil and gas are sold on a global market, however, the shortage has sent prices rising for everyone, including U.S. drivers.
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prices → sell → drivers
A large-scale U.S.-Israeli attack in the winter prompted Iran's closure of the strait, resulting in the largest oil supply shock ever recorded.
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attack → prompt → shock
Oil prices surged, catapulting inflation to its highest level since 2023.
asserted
prices → surge → 2023
Alternative trade routes in the region helped ease the fallout, but exports remained well below pre-war levels until recently.
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exports → help → levels
To be sure, oil prices have dropped in recent weeks as supply blockages have eased.
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blockages → drop → weeks
The West Texas Intermediate futures price, the benchmark index for U.S. trading, stands at about $92.
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price → stand → 92
That figure amounts to a roughly 9% drop since Sept. 15.
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figure → amount → Sept.
The price, however, remains more than 40% higher than pre-war levels.
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price → remain → levels
Oil prices account for a large share of the price of gasoline and diesel.
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prices → account → gasoline
The average price of a gallon of gas in the U.S. currently registers at $4.36, marking a decline of about 21 cents over the past month, according to AAA.
uncertain
price → register → AAA
Still, gas prices stand 46% higher than pre-war levels.
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prices → stand → levels
Even though oil supply from the Gulf has mostly recovered, the cost of transporting crude still exceeds pre-war levels, attaching new expenses to the product as it moves through the supply chain to refiners, retailers and ultimately drivers, some analysts said.
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analysts → recover → refiners
Tankers have undertaken ship-to-ship transfers as a means of evading possible attack.
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Tankers → undertake → attack
The cost-intensive maneuver involves direct transfer of oil from one ship to another while the two are at sea, handing off the crude to a flagged ship that carries less risk.
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that → involve → risk
After exiting the strait, for instance, one ship may pass oil to another.
uncertain
ship → exit → another
Another source of added cost: Some tanker captains are garnering higher pay as they face increased danger, the Financial Times (FT) reported earlier this week.
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Times → add → danger
Some captains are receiving base salaries as high as $100,000 a month, as well as a $50,000 bonus for each trip, the outlet found.
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outlet → receive → trip
Typically, regular pay for captains is $15,000 per month, according to the FT.
uncertain
pay → accord → FT
Bear in mind, the war is still going on," Tang said.
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Tang → bear → mind
"The crude oil is moving, but the price is much higher than before the attack on Iran.
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price → move → Iran
The persistence of high gas prices traces in part to uncertainty about the path forward for the Iran war, some analysts said.
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analysts → trace → war
An alternative trade route in the region, Saudi Arabia's East-West pipeline, underscores jitters felt in oil markets.
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route → underscore → markets
The pipeline carries as much as 7 million barrels of oil each day, about 5 million of which are exported, Aramco CEO Amin Nasser said in May.
uncertain
Nasser → carry → May
Oil exports transported through the pipeline amounted to roughly 5% of global supply.
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exports → transport → supply
The pipeline temporarily closed last month, however, after an attack carried out by Iran-aligned Houthi militants.
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pipeline → close → militants
…and 4 more, not listed.
The Aporia
