Written by: Salma El-Sakka
US President Donald Trump directly accused Iran, pointing to its efforts to raise global oil prices in conjunction with the approaching midterm congressional elections scheduled for November 3rd. Trump accused Tehran of fabricating reports regarding attacks and sea mines in order to influence global markets and mislead public opinion.
Price Pressures on American Consumers
These statements come at a time when consumers in the United States are facing a noticeable increase in fuel costs, as the average price of gasoline recorded about $4.29 per gallon, an increase of more than $1.25 compared to last year. Diesel prices also witnessed a large jump of up to 75% to reach $6.30 per gallon, placing additional pressures on family budgets, shipping costs, and the distribution of goods and services.
US Administration Measures to Face the Crisis
In an attempt to curb these increases, the Trump administration announced a set of measures during October, which included providing $8 billion in support to farmers to compensate for diesel costs, in addition to temporarily allowing the expansion of the use of tax-exempt fuel types. The steps also included easing restrictions on Russian diesel imports, as the arrangements allow the import of about 2.24 million barrels in the first phase.
Supply Challenges and the Global Energy Market
Analysts believe that the measures taken may not be sufficient to bring about a tangible drop in prices before the elections, given the limited production capacity of refineries and the continuation of global supply disruptions. The markets face pressures resulting from damage to refining facilities in the Middle East, the decline in the ability of some Chinese refineries to increase production, and attacks that targeted Russian refining facilities. The stability of oil flows through the Strait of Hormuz remains a decisive factor in alleviating global price pressures.
