The consensus narrative around US gasoline record high territory focuses on the day-by-day arithmetic of pump prices. What it is not fully pricing in is the supply shock now unfolding several thousand miles away, one that removes a structural assumption from the bull case for oil stability.
The Gap That Could Close in 44 Days
GasBuddy’s national petrol average currently sits 55.4 cents below the record of $5.027 per gallon set on 14 June 2022. The AAA national average of $4.4761 per gallon puts it 54.05 cents from its own all-time high of $5.0165, also recorded on 14 June. Both GasBuddy and AAA are already recording new record diesel prices every day, with GasBuddy showing $6.471 per gallon and AAA at $6.5050.
With the election 44 days away, closing a gap of roughly 55 cents requires an average daily increase of just 1.26 cents. That is not a dramatic daily move. It is the kind of grind that happens when the structural conditions favour it, and right now several of those conditions are moving in the same direction simultaneously.
Refineries are under attack. The Strait of Hormuz remains largely closed. Shipping costs have added $26 per barrel to the cost of oil. Any one of those factors would be enough to sustain upward price pressure. All three together, the question is less whether gasoline hits a new record and more what happens after it does.
The Saudi Pipeline Factor the Market May Be Underweighting
The most underweighted element in the current picture is the damage to Saudi Arabia’s East-West pipeline. Drones targeted the pipeline in the Riyadh and Medina regions on Thursday morning, causing fires and structural damage before the kingdom shut it down, according to CNBC.
The numbers behind that closure deserve more attention than they have received. According to Al Jazeera, the East-West pipeline has been moving four million to five million barrels of oil per day in recent months, representing four to five per cent of global supply. CNBC reports the pipeline has a total capacity of seven million barrels per day and runs across the kingdom to export terminals on the Red Sea.
The initial framing from some quarters suggested a repair window of three to five weeks. That window has already been revised. Four million barrels per day are now considered offline for what could be months, not weeks. The downstream consequences for Red Sea export volumes are not speculative: Reuters reports, citing three industry sources familiar with Saudi exports, that the Yanbu terminal on the Red Sea now holds stocks sufficient to maintain exports for just five to seven days. After that, a gap opens that cannot easily be bridged by alternative routing.
The popular read of oil price risk concentrates on the Strait of Hormuz. That is the right place to look, but it is not the only place. A pipeline carrying four to five per cent of global supply, feeding a terminal with less than a week of export buffer, represents a separate and compounding disruption. The two do not need to be coordinated to have coordinated effects on price.
Where the Gasoline Arithmetic Now Sits
Against that backdrop, the 1.26 cents per day required to reach a new US gasoline record high before the election looks, if anything, conservative. The arithmetic was constructed before the East-West pipeline went offline. It was constructed before the Yanbu buffer fell to a five-to-seven-day window. And it was constructed before Trump’s stated intention to target Iranian tankers for every tanker Iran hits introduced a further escalation risk into an already fragile shipping environment.
Diesel has already broken records daily. Gasoline is tracking close behind. The consensus may be treating these as two separate stories, a diesel story and a gasoline-approaching-record story. The Saudi pipeline data suggests they are the same story, running on a shorter timeline than the day-by-day pump price coverage implies.
With Yanbu stocks covering exports for five to seven days at most, the next material data point arrives quickly.
