Crude oil prices and refinery margins generally increased throughout the third quarter

Oil and gasoline markets had a rough third quarter, mostly because of renewed fighting in the Middle East. Crude oil prices started the quarter low, around $72 a barrel, then climbed sharply after military strikes resumed in July, passing $100 a barrel multiple times over the following months. Prices peaked in mid-September near $109 a barrel for futures, with spot prices even higher, as attacks on oil tankers, pipelines, and export terminals in Saudi Arabia, Russia, and Iran disrupted supply. Prices eased slightly toward the end of the quarter but stayed high, averaging around $104 a barrel, as markets weighed the chance of peace talks against a wider war.

Refineries ran hard to keep up with demand, processing more crude than in any third quarter since 2019. That pushed up their profit margins on gasoline, diesel, and jet fuel, with diesel and jet fuel margins nearly tripling compared with a year earlier. Much of this reflects supply problems overseas: Russia, China, and Middle East refineries that normally help supply the world market have been disrupted, leaving the U.S. to fill some of the gap, especially for diesel. As a result, U.S. diesel supplies were notably tight by late September.

For homeowners, the main effect to watch is pump and heating fuel prices. If your home uses heating oil, propane, or diesel-fired equipment, these tighter supplies and higher refinery margins could mean higher costs heading into the colder months, since distillate fuel — the category that includes heating oil and diesel — saw some of the steepest price increases of any fuel this quarter.