President Trump faces a paucity of policy options as energy prices threaten midterm politics. With Brent crude once again breaching $100 per barrel and average retail gasoline and diesel prices sitting around $4.20 per gallon and $6.00 per gallon respectively, the administration confronts mounting pressure ahead of elections scheduled for 55 days from now. Verbal interventions suggesting an imminent conflict resolution have achieved the most traction when delivered by multiple messengers, yet we are wary of marking this as a durable market management strategy. Treasury Secretary Bessent’s July comments that the war would be over within days may represent a recent peak in the effectiveness of this approach. For his part, President Trump appeared today to accept the reality of higher energy prices preceding the electoral cycle.
Diplomatic negotiations remain fundamentally deadlocked on core objectives. Iran insists on full implementation of the June Memorandum of Understanding, while the White House argues that naval blockades and sanctions will shift Iranian behavior, with US warships maintaining essential waterway access. Meanwhile, approximately 9 million barrels per day of Middle Eastern supply sits effectively offline, and escalation risk continues to climb. In the past 24 hours alone, the US sank five Iranian tankers in waters near key export facilities at Kharg Island and Jask, while Iran announced it fired on two US Navy ships and eight tankers and launched ballistic missiles at US bases in Jordan. The Saudi-Houthi conflict compounds these pressures, with the Kingdom experiencing its largest Houthi attack in years and incurring damage to civilian and energy infrastructure. Saudi Red Sea exports have fallen below 2 million barrels per day in recent weeks, presenting fresh risks to supply continuity.
“Millions of Middle Eastern barrels remain effectively stranded assets, making previous White House calls to OPEC futile.”
Helima Croft, Head of Global Commodity Strategy and MENA Research, RBC Capital Markets
The products problem presents acute policy challenges given refinery constraints. Spare refining capacity remains severely limited amid ongoing Russian and Middle Eastern export disruptions. The refining industry continues lobbying for a rollback of renewable fuel standards to alleviate costs, yet the White House hesitates to antagonize the agricultural constituency. Some policy analysts have privately suggested that Washington pressure Kyiv to cease attacks on Russian refineries, though it remains unclear whether such requests have been made or if Ukraine would consider halting strikes critical to depriving Moscow of fuel and eliminating the Russian war financing mechanism. Ukrainian strikes have sustained approximately 3 million barrels per day of Russian capacity offline. Concurrently, Iran and regional allies persist in targeting refinery infrastructure, with the Houthis striking Saudi Arabia’s Jizan facility again over the weekend.
China has emerged as the energy market’s swing player, raising fresh policy complications. In previous periods of elevated prices, the White House could call Riyadh to request OPEC production increases – a channel now essentially closed given millions of stranded Middle Eastern barrels. Beijing’s abundant strategic reserves and recent buyback signals pose a serious policy challenge for Washington ahead of the Xi-Trump summit. Chinese refinery runs have climbed steadily since mid-June, with current throughput at over 90 percent of pre-war levels – an increase of approximately 18 percent from early July lows. Crude imports similarly ticked upward in recent weeks, with August volumes up 19 percent from June lows, and momentum has persisted into the first week of September.
A “forever war” scenario would strain US military capacity and strategic positioning. Some market observers are now contemplating a protracted conflict, suggesting the energy system will continue finding mechanisms to move barrels to market. However, the substantial deployment of US military forces has been essential to increasing vessel transits through the Strait of Hormuz, and sustaining an indefinite escort operation would demand enormous resource commitments. Critically, the redeployment of force to the Middle East has largely occurred at the expense of US presence in the Indo-Pacific, and perpetuating such commitments could jeopardize America’s capacity to defend regional allies in that theater.
Source: Kpler, RBC Capital Markets
Figure 1, titled “Saudi Arabian West Coast Crude Exports,” presents a time-series combination chart spanning two annual cycles from 30 September through 31 August (repeated). Dark navy blue vertical bars represent the weekly average export volume, while an overlaid light blue line tracks the 4-week moving average; both are measured in million barrels per day (mb/d) along the vertical axis, which is scaled from 0 to 5. For roughly the first 18 months, weekly exports remain consistently low, fluctuating between approximately 0.4 and 1.2 mb/d, with the 4-week average stable in the 0.6–1.0 mb/d range. Immediately after the second 28 February marker, volumes surge sharply upward, reaching above 4.0 mb/d by late March; from 31 March through late July, weekly exports remain elevated between approximately 3.5 and 4.8 mb/d (peaking near 4.8 mb/d in late April), while the 4-week average plateaus around 4.0 mb/d. In late July and early August, exports drop sharply to roughly 1.2–1.5 mb/d, pulling the 4-week average down toward approximately 1.8 mb/d, before the final bar on 31 August rebounds to about 3.4 mb/d. No source attribution or footnote is displayed within the image; sourced from RBC Capital Markets.
Helima Croft authored “Geopolitical Update: Midterm Malaise,” published on September 9, 2026. For more information on the full report, please contact your RBC representative.
