Tensions around the Strait of Hormuz and supply disruptions originating in Saudi Arabia pushed up oil prices and increased gasoline and diesel costs in the United States. Rising energy expenses intensified pressure on consumers and businesses while also affecting debates over inflation and monetary policy in the US economy.
Hormuz tensions intensify supply pressures
After the United States targeted five Iranian oil tankers, Iran's Islamic Revolutionary Guard Corps announced that two US ships and eight tankers had been attacked in the Strait of Hormuz on September 9. Brent crude rose by more than 3 percent that day, also affected by attacks on energy facilities in Saudi Arabia, and surpassed $100 per barrel for the first time since May 22.
Following the attacks, Saudi Arabia's East-West Oil Pipeline, used as an alternative route to the Strait of Hormuz, was taken out of service. After it was announced that shipments to some refineries would be delayed, Brent crude rose by more than 6 percent to $107.63 per barrel.
The supply disruption also affected actual shipments. Some oil shipments planned for Europe in September were canceled, while up to 4 percent of global oil supplies could be at risk if the pipeline disruption continues.
Gasoline and diesel prices rise in the US
According to American Automobile Association data, the average price of gasoline in the United States rose to $4.44 per gallon as of September 17. The price, which increased 38.7 percent from the same period last year, was accompanied by a rise in the average price of diesel from $3.70 to $6.40 per gallon, reaching a record level.
Fuel price increases intensified energy-driven inflationary pressure in the United States. The Consumer Price Index rose 0.4 percent month on month and 3.4 percent year on year in August, while the 3.9 percent increase in gasoline prices accounted for more than one-third of the monthly inflation increase.
Pressure from oil prices, spreading across the economy through transportation and production costs, also affected the monetary policy of the US Federal Reserve. The Fed raised interest rates for the first time since 2023, increasing the policy rate by 25 basis points and lifting the range to 3.75-4 percent.
Although the rate increase does not directly eliminate supply shortages, it limits economic activity by raising borrowing costs. The dollar's appreciation against other currencies makes oil more expensive for buyers using different currencies, suppresses global demand and helps limit price increases.
Fuel prices create pressure ahead of the midterm elections
The rapid rise in gasoline and diesel prices increased pressure on the Washington administration to reduce energy costs as the November 3 congressional midterm elections approached. The White House is considering using the Defense Production Act to increase the country's oil refining capacity and ease the burden on consumers and businesses.
US President Donald Trump said the conflict with Iran would end and that the flow of oil through the Strait of Hormuz would continue. As oil prices again rose above $100 on September 9, Trump argued that the war would end immediately after the November 3 midterm elections.
Trump also claimed that Iran was trying to influence the elections, that the US Navy had full control of the Strait of Hormuz and that many oil tankers passed through the strait every day. Saying that gasoline prices would fall once the war ended, Trump said in the following days that the conflict could end before the elections and that all forces had not been used against Iran.
Initiatives in the US House of Representatives to withdraw American forces from the clashes with Iran also remained on the agenda alongside the war's economic costs. Trump claimed on September 14 that Iran wanted to reach an agreement with Washington quickly and willingly. Iran, however, announced that it would not hold talks with the United States until its conditions were met.
Brent crude rose by approximately 5 percent during the day on September 14, reaching $109.80 per barrel. After Trump's remarks, Brent crude gave back most of its gains and ended the day at $105.68, up 1 percent.
Rising gasoline and diesel prices in the United States made energy costs one of the main economic issues ahead of the midterm elections. The course of the conflict between Washington and Tehran remained important for the direction of fuel prices.
