The U.S. Should be Insulated from Middle East HappeningsBy Denton Cinquegrana
Conflict Driving Market Volatility The U.S.-Israel attack on Iran and Iran’s counterattack have caused crude oil and refined product markets to move sharply higher before doing a u-turn. Several days into the hostilities, the timeline is unknown. And while the president has said that the conflict is essentially over, there is still plenty of hostilities being exchanged. However, in the long run, the U.S, and especially U.S. refiners, should be able to weather this storm, and gasoline and diesel supplies should not be significantly impacted. Crude oil prices ramped up when the market reopened after the initial attacks on February 28. Brent crude oil prices remain comfortably above the $80 level, with WTI hovering around the low $80s. At one point prices rallied toward $120 before backtracking. There has certainly been some initial shock to gasoline and diesel prices in spot and wholesale markets, but there has been little to no impact on U.S. supplies. The Impact of the Strait of Hormuz The effective closure of the Strait of Hormuz is likely to leave the world short 10–15 million barrels per day. The key concern is that with the strait closed and the conflict continuing, producers in the region, Saudi Arabia, the UAE, Kuwait, and Iraq, could see storage tanks fill without an export outlet, forcing them to reduce output. The closure of the strait is not necessarily an issue of ships leaving, but ships coming in to load crude oil and refined products at various terminals. Over the past 10-15 years, thanks to the shale boom in places like West Texas, the U.S. has wean itself off of Middle eastern crude oil. According to the Energy Information Administration, the U.S. imported 676,000 b/d from the Persian Gulf in 2025. At the peak in 2001, the U.S. was importing more than four times as much at 2.761 million b/d. While lighter crude oil imports from the Middle East leave the U.S. more insulated on crude supply, the closure of the Strait of Hormuz is having a larger impact on Asia. During the 2023–2025 timeframe, about 81% of Middle Eastern crude oil exports went to Asia. 
The Impact of the Strait of Hormuz
The effective closure of the Strait of Hormuz is likely to leave the world short 10–15 million barrels per day. The key concern is that with the strait closed and the conflict continuing, producers in the region, Saudi Arabia, the UAE, Kuwait, and Iraq, could see storage tanks fill without an export outlet, forcing them to reduce output. The closure of the strait is not necessarily an issue of ships leaving, but ships coming in to load crude oil and refined products at various terminals. Over the past 10-15 years, thanks to the shale boom in places like West Texas, the U.S. has wean itself off of Middle eastern crude oil. According to the Energy Information Administration, the U.S. imported 676,000 b/d from the Persian Gulf in 2025. At the peak in 2001, the U.S. was importing more than four times as much at 2.761 million b/d. While lighter crude oil imports from the Middle East leave the U.S. more insulated on crude supply, the closure of the Strait of Hormuz is having a larger impact on Asia. During the 2023–2025 timeframe, about 81% of Middle Eastern crude oil exports went to Asia. U.S. Supply and Import Trends As refineries have reduced their reliance on Middle Eastern oil as the United States has become the largest oil producer in the world. Imports from Canada have also essentially doubled over the past 15 years, as the heavy crude oil from Canada is a better match for U.S. refineries. Based on OPIS estimates, the U.S. received about 4% of Middle Eastern crude oil production between 2023 and 2025. Saudi Arabia remains the largest Middle Eastern exporter to the U.S., with most of those barrels going to the 650,000 barrel-per-day Motiva Port Arthur refinery on the Texas Gulf Coast. Gasoline Inventories and Seasonal Transition Heading into the spring, gasoline inventories are quite comfortable. Based on the most recent data from the Energy Information Administration through the end of February, U.S. gasoline inventories are running 10.6 million barrels above the seasonal average. Although the EIA does not separate gasoline storage by Reid Vapor Pressure (RVP), it is safe to assume that a significant portion of the 253 million barrels in storage is still high-RVP gasoline. This high-RVP gasoline will eventually need to be purged from the system to make room for low-RVP summer-grade gasoline. That seasonal transition typically brings a price increase, and this year the events in the Middle East have accelerated that movement. Rising Gasoline Prices The national average retail gasoline price on March 3–4 rose by just over 20 cents per gallon, marking the largest two-day increase since September 2–3, when prices jumped 29.75 cents following Hurricane Katrina. While prices rose swiftly shortly after missiles started flying prices continued to rise with the national average teetering on $3.55 per gallon. Not only have prices risen more than 50cts since the conflict began, but price deflation has disappeared. For much of 2025 and the start of 2026 U.S. gasoline average prices were running cheaper than the previous year, that is no longer the case as the current average is about 45 cent per gallon higher than the same time in 2025. Refinery Activity and Market Outlook At present, refiners are running about 16 million barrels per day of crude oil and other feedstocks. That figure is roughly 300,000 barrels to as much as 1 million barrels per day above typical levels for this time of year. Seasonal refinery maintenance is also underway, but during peak summer demand, expect to see refinery runs top 17 million barrels per day. For perspective, according to the EIA, gross runs of crude oil and other feedstocks at U.S. refineries were above 17 million barrels per day every week from the week of May 30 through the week of September 5. Higher prices are likely to motivate refiners to run at elevated rates, as margins improve due to seasonal demand and the potential for increased refined product exports. With many countries more dependent than the U.S. on Middle East crude oil and refined products, the U.S. refiner will have an opportunity to fill refined product gaps. Bottom Line Crude oil availability for the U.S. should not be a problem, and U.S. refiners are likely to continue operating at strong rates. However, this remains a “tide lifting all boats” situation. The longer the conflict in the Middle East continues, the greater the likelihood of additional price shocks. While gasoline and diesel prices are pointing higher this summer, U.S. gasoline supplies themselves are unlikely to become a major issue. 
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