'Oil market is a hot mess,' analyst says as supply shock keeps prices near $100: Chart of the Day

'Oil market is a hot mess,' analyst says as supply shock keeps prices near $100: Chart of the Day

Ines Ferré · Senior Business Reporter

Thu, September 17, 2026 at 3:27 PM GMT+3 3 min read

Oil prices remain close to $100 per barrel (BZ=F), with no indication of a resolution in the Middle East. That has raised speculation that the Trump administration may be tempted to impose an export fuel ban ahead of the midterm elections to force fuel prices lower.

"I think the odds of a diesel export ban announcement before midterms is high," wrote Liz Thomas, chief market strategist at SoFi, on X this week, noting diesel prices have been accelerating higher.

The average price of gasoline on Thursday sat at $4.43 per gallon. The national average price of diesel is at a record high of $6.39 per gallon, according to AAA. In California, prices have jumped by more than $1 per gallon in a month, to above $8.34 per gallon.

GasBuddy Head of Petroleum Analysis Patrick De Haan noted on X that "diesel could hit $6.60/gal in a few days, surpassing the inflation-adjusted peak seen in 2022."

Read more: How oil price shocks ripple through your wallet, from gas to groceries

Other analysts were blunt in their characterization of the market.

"The Oil market is a hot mess," Charlie McElligott of Nomura Securities wrote on Tuesday, noting global rising bond yields show the market is "Waking Up" to an energy shock 2.0.

The difference between this one and the earlier supply shock during the Iran-US war in the spring is that market participants see this oil shortage as more severe.

Strategists point to China refilling its reserves that it emptied during the war, agitating the "Achilles Heel" of the Trump administration ahead of the midterm elections.

"The 'Shortage Shock' now is almost certain to force POTUS' hand," with a fuel export ban in order to lower fuel prices domestically, McElligott said.

The move, he said, could serve as a "nuke to the global economy" as the rest of the world struggles to fill the gap of imports from the US.

West Texas Intermediate jumped earlier in the week, narrowing the spread with Brent crude, as traders bid up US contracts, shown in Yahoo Finance's AlphaSpace data.

On Tuesday, Senate Majority Leader John Thune suggested he was "open to exploring" an export ban for diesel fuel, as prices remain at record highs above $6 per gallon.

But an export ban would likely backfire, say strategists.

"If we were to ban exports, refineries in the USA would not want to produce extra distillate since they could not sell it," said Andy Lipow, president of Lipow Oil Associates.

That means refineries would produce less gasoline, jet fuel, lube oils, and asphalt.

"Shortages would develop in those product categories, and I would expect higher prices at the pump," added Lipow.

Meanwhile, stocks were on pace to recover on Thursday after a selloff in the previous session, when the Federal Reserve raised interest rates by 25 basis points.

Prior to the Fed hike, Ed Yardeni of Yardeni Research said, "We are moving our S&P 500 target of 8,400 for year-end to mid-2027." His firm placed a 7,900 price target for the end of 2026.

"The risk is that higher-for-longer oil prices continue to push bond yields higher," Yardeni wrote. "Elevated oil prices would also imply that a federal funds rate (FFR) hike … won't be a one-and-done event, but rather the beginning of a rate-hiking cycle."

Ines Ferre is a senior business reporter for Yahoo Finance.

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