CNBC Television Sep 17, 2026 5 min
With Matt Smith, Director of Commodity Research at Kpler
Diesel hit a record $6.40 a gallon, up nine cents in a day, and regular unleaded sits near $4.50. Matt Smith said the reason is not the crude price on its own.
Gasoline is supposed to get cheaper at this point in the year, with the summer driving season over. Instead, six and a half months of conflict have taken far more supply out of the market than demand, and the refineries that turn crude into fuel have cut their runs to match.
"And so that's where the pain is, and less so on the crude side of things."
Smith is Director of Commodity Research at Kpler, which tracks cargoes and refinery activity by satellite and vessel data. CNBC Television asked him what ends this, and he answered with a sequence rather than a single fix.
The full segment is covered here so you can skip it.
Here are the 7 numbers that matter.
Key Takeaways
Oil is up about $30 from early last month, and that is what is reaching the pump
Smith puts lost production at about 8.5 million barrels a day across six and a half months of conflict
Refinery runs were cut to match, so the shortage is in gasoline and diesel rather than in crude
The Middle East exports about 3 million barrels a day of products against 15 to 16 of crude, and products come back last
A month-long outage on Saudi Arabia's East-West pipeline would strand over 100 million barrels at Yanbu
Over 90% of US groceries move on 18-wheelers, which is how a diesel price reaches the grocery aisle
China stepped out in March when crude went into triple digits, and its spare refining capacity is only creeping back
1. Why the Pump Hurts
Smith started with the seasonal point: this is when gasoline normally gets cheaper. It has not. He then split the problem into supply lost and refining cut, and said the second is what the driver actually feels.
"And particularly with gasoline, it's a seasonal time of year when it typically drops, right? We're through the summer driving season." — Matt Smith
"But in terms of oil prices here, we're up about $30 from early last month, and so that is working its way into prices at the pump." — Matt Smith
"And so in terms of production, we've probably lost about 8.5 million barrels a day over that whole period." — Matt Smith
"Now, the offset to that has been refinery runs have really dialed back. But the consequence of doing that means globally we're not producing as much gasoline, as much diesel." — Matt Smith
2. What Would End It
Asked for the way out, Smith said reopening the shipping strait is not sufficient on its own. He listed the steps in order and added a second supply problem that has nothing to do with the Middle East: Russia has banned diesel exports after repeated Ukrainian drone strikes on its refineries.
"We need the conflict to end. You need to get the strait fully opened, back-up production increased, refinery runs increasing." — Matt Smith
"We've got to remember that the Middle East is a huge product exporter as well, not just crude." — Matt Smith
"On top of that, exacerbating the situation, particularly for diesel, is you've got Russia with Ukraine — relentless drone strikes there has put a Russian diesel export ban in place there, the second-leading exporter globally behind the U.S." — Matt Smith
3. Products vs. Crude
The anchor asked why refined fuel has been harder to move out of the region than crude. Smith gave the volumes and then the sequencing problem, which is why product supply recovers last.
"In terms, it's about 3 million barrels per day typically leaves, as opposed to the 15 to 16 for crude." — Matt Smith
"But you can't ramp up your refineries until you ramp up your production, and you can't ramp up your production because you don't know that you can get it out." — Matt Smith
"So that will be the last piece of the pie, though." — Matt Smith
4. The East-West Pipeline
Saudi Arabia's East-West pipeline shut on Friday. The energy secretary called the outage temporary; some analysts disagree. Smith looked at the satellite imagery and sized the loss, then described what Saudi Arabia is doing instead, which is loading barrels on the Gulf side and moving them through the Strait of Hormuz.
"And if that pipeline stays offline for like a month, then that's over 100 million barrels — 120 million barrels — that can't be exported out of Yanbu there." — Matt Smith
"The ironic thing is actually you're now seeing more being exported or loaded in the Mideast Gulf from Saudi Arabia, and they're sneaking that out through the Strait of Hormuz." — Matt Smith
"We just don't know — it's a workaround that's in place. So we don't know how much is actually going to flow there." — Matt Smith
5. Grinding Higher
Asked where WTI, gasoline and diesel go next, Smith gave one direction and put the risk in one product.
"I think that we see oil prices just grinding higher, higher here" — Matt Smith
"And so that's where the real concern is, because that doesn't get fixed very easily." — Matt Smith, on diesel
6. Diesel in the Aisle
The anchor asked how long before diesel works through the economy. Smith said it already has, and made the case through the freight system rather than through an inflation statistic.
"It's already doing so, right, because $6.40 for a gallon — like, over 90% of our groceries, we move around the U.S. on 18-wheelers." — Matt Smith
"It's agriculture, it's construction, it's manufacturing." — Matt Smith
"You go in the grocery store, you can already see that prices are rising. And that's only going to continue as that cost gets passed through." — Matt Smith
7. China's Idle Refineries
China holds most of the world's spare refining capacity, and it is not using it. Smith dated the decision to March, when crude went into triple digits, and suggested Beijing expected the strait to reopen by late summer.
"So China made the choice back in March, when prices went into the triple digits for oil — they were like, we're good, we're going to step out of this. They dialed back their refinery runs big time." — Matt Smith
"Perhaps they thought the strait was going to open back up in August, September — they take that temporary step out of the market." — Matt Smith
"They are gradually creeping back in here, but it's just not in China's interest here." — Matt Smith
The broadcast ended as he began to explain what China is focused on instead, so that answer is not on the recording.
Bonus Insights
Two points from Smith cut against the way this story is usually told. The first is that the crude price is the smaller part of the problem: the barrels are being produced somewhere, but the plants that turn them into fuel are running below capacity, and that is a separate constraint with its own timeline.
The second is that the diesel problem is not one conflict. Russia's export ban sits on top of the Middle East outage, and Smith named Russia as the second-largest diesel exporter after the United States, which means two of the top three suppliers are impaired at once.
Smith's bottom line is that crude prices grind higher from here and diesel is the part that does not mend quickly, because refining capacity cannot come back before the production and the shipping routes do.
Products, Companies & Tools Mentioned
Kpler (Smith's employer; the commodity data firm whose cargo and refinery tracking underlies the figures he gave)
Saudi Arabia's East-West pipeline (Shut since Friday; a month offline would strand over 100 million barrels at the Yanbu export terminal)
Strait of Hormuz (The route Saudi barrels are now being moved through as a workaround for the pipeline)
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