Middle East Tensions Continue to Shake Oil Markets

The ongoing situation in the Middle East has led to significant price fluctuations in crude oil and gasoline markets. Despite recent increases, both prices remain below their May peaks, reflecting a resilient market.

Crude oil is a major factor in gasoline pricing, accounting for over half of the cost. However, refining, transportation, distribution, and taxes also play a crucial role, and these costs don't always move in tandem with crude oil prices.

The physical supply chain of crude oil to gasoline takes time, typically weeks or months. As a result, changes in crude oil prices often take time to be reflected at the pump. Global refining capacity has been constrained due to disruptions, making gasoline markets tighter than crude markets.