US Refinery Limits, Global Supply Shocks Drive Pump Pain Amid Iran War Disruptions

Global supply shocks and US refinery limits are driving pump pain for American drivers. The national average price of gasoline hovers near $4.15 a gallon, while diesel prices reach record territory amid continued disruptions in global oil supplies tied to the Iran war.

According to Matt Coday, president of the Oil and Gas Workers Association, about 20% of the world's oil moves through the Strait of Hormuz. Disruptions there can quickly ripple into US gasoline and diesel prices.

Fresh strikes on energy infrastructure have pushed crude back toward $100 a barrel, adding to upward pressure on fuel prices. Coday points out that many Gulf Coast refineries were built years ago and are not suited for the lighter crude produced in much of the US shale boom.

The Trump administration has announced a sweeping Venezuelan oil arrangement aimed at securing longer-term supplies of heavy crude for Gulf Coast refineries, which could eventually help lower gasoline and diesel prices over time. Coday believes that importing more Venezuelan heavy crude could allow the US to replace barrels in the Strategic Petroleum Reserve with a midgrade crude.