• Brent crude hit $116 a barrel, approaching its Iran war peak amid fears of renewed fighting after the midterms.
  • U.S. gasoline averages $4.29 a gallon, up 40% year-over-year, adding $142 billion in extra fuel spending this year, according to Brown University researchers.
  • Michigan and Ohio saw the largest weekly gasoline price increases, driven by a Chicago-area refinery outage and global supply concerns.

Brent crude oil surged to near $116 a barrel on Friday, closing in on its peak from the Iran conflict earlier this year, as fears of renewed military action after the U.S. midterm elections and a Midwest refinery disruption combined to jolt energy markets.

The international benchmark traded at $115.89 a barrel mid-morning EDT, up from Thursday’s settlement of $113.17, according to market data. Earlier in the day, it had touched $114.72, a five-month high. The rally brings prices within sight of the wartime peak, though some market participants debate whether the earlier high has already been surpassed.

At the pump, the pain is unmistakable. The national average for regular gasoline stood at $4.29 a gallon, up from $3.07 a year ago—a roughly 40% increase, according to AAA. That has translated into an additional $142 billion in fuel spending this year, according to estimates from Brown University researchers, though the university’s tracker shows slightly inconsistent totals. The figure measures extra gasoline and diesel outlays since February 28 relative to a modeled no-war baseline.

A Supply Shock, Not a Demand Story

The price surge is rooted in supply and logistics disruptions, not robust demand. Gulf crude exports have recovered to more than 75% of prewar levels, but Middle Eastern refined-product shipments remain below half their prewar volume. The result: recovering crude production has not fully alleviated shortages of usable fuels, particularly diesel.

“The diesel market is exceptionally tight, and that’s feeding through to goods costs and inflation,” said an analyst who requested anonymity to speak candidly. “You can’t just turn the taps back on; refineries and shipping lanes need to function normally again.”

The International Energy Agency (IEA) has warned that record diesel prices are raising costs for freight, goods, and heating, eroding household purchasing power and weighing on economic activity. In the U.S., refining margins are exceptionally strong, but European and Asian refiners are being squeezed by expensive delivered crude and high freight costs.

Adding to the global squeeze is a local problem: a refinery outage in the Chicago area has tightened regional gasoline supply, causing prices in Michigan and Ohio to spike far above the national average. Bloomberg reported weekly increases of 17 cents in Michigan and 10 cents in Ohio for the October 21–22 period, though the data does not establish a precise nationwide ranking.

Political and Geopolitical Crosscurrents

Markets are also pricing in escalating geopolitical risks. Reports that the U.S. and Israel have prepared options for renewed attacks on Iran after November’s midterms have heightened fears of a wider conflict, even though no final decision has been made. Shipping security remains contested: Iran’s Revolutionary Guards claimed vessels were attacked or struck mines, while President Donald Trump disputed that account and accused Iran of trying to drive up oil prices before the election.

Policy responses are underway. Ohio has temporarily suspended state gasoline and diesel excise taxes, offering some relief, though local reports describe a sharp overnight jump in Cincinnati despite the suspension. On October 2, the G7 committed to accelerating previously agreed emergency oil deliveries, prioritizing diesel releases in the coming weeks.

The international dimensions extend beyond Iran. Houthi attacks have raised risks to Saudi infrastructure, and Saudi Aramco (2222.SR) reportedly instructed employees to evacuate its Dhahran headquarters and work remotely.

Outlook Hinges on Shipping and Refineries

Near-term volatility is likely to persist, hinging on shipping attacks, military decisions, and refinery recovery. Tom Kloza, global head of energy analysis at Oil Price Information Service, warned that parts of Michigan, Ohio, Minnesota, Illinois, and Indiana could see $5 gasoline—a regional risk assessment, not a national forecast.

The IEA expects oil markets to remain in deficit through year-end despite weakening demand. Global inventories were 509 million barrels below end-February levels by the end of September, leaving little cushion for further disruptions. For 2027, the agency forecasts a substantial supply recovery and a partial rebound in demand, but warns that diesel markets could remain tight well into next year.

“Restoring crude production alone won’t immediately rebuild depleted fuel inventories,” the IEA said in its latest report. “Recovery also requires functioning refineries, secure shipping, and renewed Middle Eastern product exports.”

As the midterms approach, the political stakes are rising. The price surge is squeezing voters in key states like Michigan and Ohio, where refinery-related increases are particularly acute. How lawmakers respond—and whether the conflict escalates—could shape both the energy landscape and the ballot box.

Clarification: An earlier version of this article stated that Brent crude had surpassed its Iran war peak. In fact, futures are approaching that peak, while physical North Sea Dated crude traded around $134 earlier this month, according to the IEA—a different measure.