Following the conflict between the US and Israel and Iran, diesel and gasoline prices in the US surged. Initially, fuel supply was ample, and the changes were primarily reflected in prices. However, recent reports of diesel shortages at some gas stations , while currently isolated incidents, have highlighted the underlying risks. If the supply situation for refined oil products continues to deteriorate, more and more stations will face gasoline and diesel shortages. The market is undergoing a critical turning point: the energy issue has evolved from a simple pricing problem to a delivery problem that cannot be directly resolved through monetary means. Supply distance and payment capacity will determine the level of energy security in different regions, ushering in a new phase for the global energy crisis.

Regional price differences have widened dramatically, and geographical location determines fuel availability.

The stability of fuel supply is becoming increasingly critical, particularly in relation to geographical proximity to production areas and refineries. Texas, home to numerous refineries and oil fields, boasts ample domestic production capacity. As of September 20th, the state's average diesel price was $5.9779 per gallon, and the average price of regular gasoline was $3.9480 per gallon. In contrast, California, with its limited domestic refining capacity and stringent air pollution regulations raising refining standards, faces greater pressure on refined product supply. During the same period, the statewide average diesel price reached $8.4244 per gallon, and the price of regular gasoline climbed to $6.1533 per gallon, a significant price difference between the two states. The impact of the energy shock extends beyond road transportation. Rising aviation fuel prices have also impacted the civil aviation industry, with several airlines announcing flight reductions to offset the operational pressure from increased fuel costs. Previously, market participants were accustomed to using price to gauge energy scarcity, assuming that as long as the price was right, refined products could be purchased. However, the current reality is shattering this established perception. In addition to the huge differences in energy costs between different regions, whether fuel can be successfully delivered to its destination has become an even more pressing practical problem.

The nature of the crisis has shifted: from a pricing issue to a delivery challenge.

Following geopolitical disruptions to the crude oil market, the underlying logic of the energy market has shifted. Previously, disputes at the pricing level could theoretically be resolved through monetary bidding; however, the market has now entered a phase of delivery constraints, where funding alone is no longer sufficient to guarantee timely fuel delivery. The stable supply of gasoline, diesel, and jet fuel is primarily determined by two core factors. First, geographical proximity to the supply source, i.e., physical delivery capability. Even with a signed supply contract, if jet fuel cannot be delivered to the airport before the scheduled flight departure, and replenishment is delayed until after flight cancellation, the supply commitment becomes meaningless. Timeliness is a crucial requirement for refined oil product delivery. Second, the payment capacity of market participants. With the continued rise in oil prices, many companies that previously held sufficient cash reserves to cover fuel procurement expenditures are now finding it difficult to maintain the same level of funds, leading to increasing cash flow pressure. Several regions globally exhibit high vulnerability. Northwestern Europe, heavily reliant on imported refined petroleum products, and inland markets face the dual pressures of winter heating demand and freight fuel consumption. The US Gulf Coast, home to numerous refineries and export facilities, is poised for rapid global market disruptions should supply occur there. Emerging economies heavily reliant on imports often experience foreign exchange shortages and shipping financing difficulties before physical inventories run low. Large hub airports, with their highly concentrated fuel demand and extremely limited alternative supply channels, share a common characteristic: when energy supplies reach their most critical point, finding alternative sources quickly becomes extremely difficult.

With inventory levels nearing their limit, a forced contraction in demand may become a reality.

In this round of energy crisis triggered by geopolitical conflicts, global refined oil inventories have fallen to near the minimum operating level. This means the market must achieve a dynamic balance between daily consumption and daily production, with no surplus inventory to buffer the supply-demand gap. Supply recovery or consumption decline is inevitable, and shrinking consumption is not a sign that the crisis is over, but rather a signal that it has truly arrived. Once the inventory buffer disappears, without additional reserves to smooth out short-term disturbances, the market can only realign supply by compressing demand. This is not a spontaneous, mild market adjustment, but a passive reduction in usage. Many end-users are forced to reduce their consumption of petroleum products, and in some cases, even stop using oil altogether. This situation will not only affect a single industry; road freight, civil aviation, and manufacturing heating will all feel the pressure. Regional disparities will further widen, with regions farther from production centers and with weaker payment capabilities feeling the impact of fuel shortages first.

Conclusion

For a long time, the market has been accustomed to using oil prices to judge the degree of energy shortage, assuming that high prices can guarantee ample supply. However, under the current geopolitical tensions, the energy crisis has moved beyond the price stage. Physical delivery capacity, regional inventory, and corporate cash flow are now forming new constraints. Regional price differences are widening, sporadic supply disruptions have occurred in some areas, and refined oil inventories are approaching safety thresholds. If the supply side cannot be quickly restored, passively suppressing consumption will become a reality. This change also reminds the global market that the era of simply relying on bidding with capital is over. The geographical distribution of energy resources and the resilience of the supply chain will become core indicators that cannot be ignored in assessing energy security in the coming period.