The Strait of Hormuz shock moves from oil into diesel and freight
With exports through the strait down nearly 40% and US diesel at $6.33 a gallon, the Research Brief argues the price will be higher still by the Fed's 28 October decision.
This week, in brief
- Oil leaving the Strait of Hormuz averaged 8.5 million barrels a day in the week ended 12 October, nearly 40% below pre-war levels, and a container ship sank there on 14 October. The strait is open on paper and failing as a trade route.
- AAA put US diesel at $6.33 a gallon on 16 October, more than 70% above a year earlier, while petrol was down a couple of cents on the week at $4.33. The war is taxing the movement of goods before it taxes the family car.
- China agreed on 9 October to halve hybrid exports to the EU, a cut the Commission won directly from Beijing. Leaders have already moved on to chemicals and machinery, which puts more industries in the trade fight.
- The Nasdaq Composite fell roughly 4.5% on the week, its worst since June, and Korea's Kospi fell 14.5%, its worst since 2008. The reporting confirms the scale without settling the cause, and next week's earnings start to test it.
The Iran war is reaching household budgets through the lorry before the pump
Filling a lorry is getting expensive much faster than filling a car, and that is how households will end up paying for the war around the Strait of Hormuz. Diesel is what moves food and stock. AAA put the average US diesel price at $6.33 a gallon on 16 October, more than 70% above a year earlier. Regular petrol was $4.33 on 15 October, down a couple of cents on the week. The Research Brief takes the view that AAA's average US diesel price on 28 October 2026, the day the Fed announces its decision, will be higher than the $6.33 a gallon recorded on 16 October.
The reasoning is physical. Oil leaving through Hormuz averaged 8.5 million barrels a day in the week ended 12 October, nearly 40% below pre-war levels, ships are now being sunk there, and diesel and jet fuel are where a thinner supply bites hardest and soonest. The strongest objection is that diesel has already run so far that hauliers and farms will cut their use and drag the price back. If diesel falls while the attacks continue, rerouting and stockpiles are absorbing the shock, and we are wrong.
For you, in one line
UK · Mortgage, rent and bills
Dearer oil adds pressure on the Bank of England to raise rates on 5 November, and mortgage rates follow what lenders expect the Bank to do.
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Sources
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The Deep Dive
- Bank of England
- European Central Bank
- Federal Reserve ·
- Federal Reserve
- Office for National Statistics · Consumer price inflation, UK: September 2026
- AAA · Gas Prices Not Budging Much as Crude Oil Remains High ·
- Bloomberg
- CNBC · Brent oil touches $110 as Iran escalates Hormuz attacks, Ukraine vows to hit Russian refineries ·
- CNBC · U.S. Treasury yields waver as traders wrap up volatile week ·
- CNBC · UK economy grew 0.1% in August, beating expectations ·
- CNBC · Container ship sinks in Strait of Hormuz as Iran steps up attacks ·
- CNBC · Tanker attacks in Strait of Hormuz surge to wartime high as Iran tries to choke off oil exports ·
- CNBC · 10-year Treasury yield is higher as traders look past inflation data, await jobs report ·
- CNBC · European Central Bank hikes interest rates to 2.5% as policymakers see risk of higher inflation, weaker growth ·
- CNBC · The Strait of Hormuz crisis explained: What it means for global shipping ·
- CNN · Two cargo ships sunk in Strait of Hormuz as Iran ramps up attacks in run-up to midterms ·
The Rest of the Week
- SEC
- stellantis.com
- volkswagen-group.com · Investors
- Bloomberg
- Bloomberg
- Bloomberg
- CNBC · Major earnings reports are due next week, but strong results may not be enough to quell market fears ·
- CNBC · Fed's Warsh withholds rate signal, praises recent global tightening ·
- CNBC · Netflix to lay off roughly 1,000 employees, or 6% of workforce ·
- CNBC · China and Europe agree to cut Chinese hybrid vehicle exports by half ·
- CNN · Nasdaq sinks more than 2% as investors raise questions about AI debt ·
- Euronews
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