US gasoline, diesel prices set to surge again amid Iran war

The effects of the US-led war on Iran are expected to intensify with another sharp rise in gasoline and diesel prices, analysts warn, as damage to Saudi Arabia’s key East-West oil pipeline threatens to deepen disruptions to global crude supplies, The Washington Post reports.

The 745-mile pipeline is Saudi Arabia’s main overland alternative to the Strait of Hormuz, connecting the kingdom’s eastern oil fields with export terminals on the Red Sea. US Energy Secretary Chris Wright said on September 15 that the pipeline would be operational again within days, while the White House has pointed to renewed tanker traffic through the Strait.

However, analysts who reviewed satellite images of the damage expect a significantly longer disruption. Andrew Lipow, a consultant specializing in oil infrastructure, said the images “show a significant amount of damage” and that repairs could “take a month or two.”

“They will need to replace piping, valves, all the electrical stuff,” he said. “It is not like you can just go to Costco and pick that stuff up off-the-shelf.”

Satellite imagery reviewed by The Washington Post showed damage to at least two pumping stations along the pipeline. A third oil facility, an Aramco bulk plant in Abha, also appeared to have been damaged, according to the report.

Meanwhile, analysts warn that shortages of crude oil, combined with damage to refineries in the Middle East and Ukraine, could trigger fresh price shocks. Tom Kloza, chief energy adviser at Gulf Oil, predicted on X that September 16 would “see staggering increases at the pump for both gasoline & diesel.”

“Fuel margins have yet to catch up with previous wholesale hikes,” he wrote. “Watch for huge increases in Great Lakes and Rocky Mountain states in particular.”

Patrick De Haan, head of petroleum analysis at GasBuddy, similarly warned: “Buckle up. Gas and diesel look set for a spike over the next 48 hours, hardest in parts of the nation’s interior.”

AAA said the national average price for regular gasoline stood at $4.37 per gallon on September 16, while diesel reached a record $6.31. In California, diesel averaged $8.27.

Industry officials are considering possible government intervention, including a diesel export ban. Senate Majority Leader John Thune said he was open to exploring the option, while economists warned it could worsen the energy crunch.

“The diesel problem is a refining capacity and crude quality problem layered on a war,” Tracy Shuchart, senior economist at NinjaTrader, wrote on X. “An export ban addresses neither and makes both worse.”

By Vafa Guliyeva