Potential strategic stock releases and adjustments in global trade flows, alongside "some relief" in parts of the refined products market, could help ease some of the pressure in the energy markets, but underlying issues did not go away, an expert said.

"We're starting to see some relief in parts of the refined products market, particularly diesel, but much of that relief is coming from outside the Middle East," said Michelle Brouhard, the head of policy and geopolitical risk at energy and commodities platform Kpler.

"Russia has announced plans to increase diesel exports significantly in November, while potential strategic stock releases and adjustments in global trade flows could also help ease some of the immediate pressure. But the underlying problem hasn't gone away," Brouhard told Daily Sabah.

Answering the question on the potential outlook for oil prices following the midterm elections in the U.S. and the situation in the Gulf region, Brouhard said that forecasting daily or weekly movements in commodity prices is "extremely difficult" but also pointed to a scenario including potential de-escalation.

"The more important question isn't whether the U.S. strikes Iran, but how Iran responds. That's ultimately what will determine the direction and magnitude of the market's reaction," she told in a response to a query by Daily Sabah sent on Monday, before the reported U.S. strike on Iran's Qeshm Island.

Brent, the international standard for oil, climbed around 0.7% to $105.50 on Tuesday at 10 a.m. GMT, while the U.S. benchmark for crude oil, WTI, was up by around 1% to $97.45.

The slight surge in prices came following the reported attack and a sharp slide in prices a day earlier on the prospect of diplomatic efforts between the U.S. and Iran.

"If Iran's response is largely symbolic, such as a limited strike on an evacuated U.S. military base, similar to what we've seen in previous confrontations, Washington could declare victory and move toward de-escalation," Brouhard said.

"In that scenario, I would expect oil prices to initially move lower as the market begins to unwind some of the geopolitical risk premium," she added.

Prices have skyrocketed following the start of the U.S.-Iran conflict at the end of February, which disrupted trade and energy flows and impacted production and deliveries from the oil-rich Gulf region.

Refined products, diesel

Kpler's Brouhard also pointed out that refined product flows through the Strait of Hormuz "remain disrupted," adding that currently the market is seeing pressure shifting from diesel toward jet fuel.

"Before the conflict, the Middle East accounted for roughly 31% of global jet fuel exports, so the loss of those supplies is extremely difficult to replace," she noted.

The increase in fuel costs driven by the U.S. and Israel's war with Iran has already weighed on airline companies, with companies such as Spirit Airlines ceasing operations, while the sector warns about the soaring prices impacting the future outlook as well.

Irish no-frills airline Ryanair said Monday it would launch a cost-cutting drive and hike fares next year to help offset the impact of soaring jet fuel prices, as it reported a drop in profit after tax of 6%.

Diesel prices have also been of particular concern in parts of Europe and the U.S., but the pressure has somewhat moderated as Russia also returns to international markets and is expected to boost deliveries following the deal with the Trump administration.

Still, Russian refineries and infrastructure have also been attacked as part of its conflict with Ukraine, which has recently spilled over into the Black Sea too – also impacting deliveries of grain.

"What's particularly concerning is that refiners have limited flexibility. Increasing jet fuel production often comes at the expense of diesel, meaning that solving one shortage can create or worsen another," Brouhard noted.

To tackle disruptions, the International Energy Agency (IEA) said last month it agreed to accelerate the release of oil stocks and ⁠to prioritize diesel supplies as governments around the world sought to address record prices following the war.

Gulf region recovery?

On the question of a recovery in Gulf production and exports over the coming months, Brouhard said that "much will depend on regional security, the restoration of shipping flows, and whether further escalation can be avoided."

"Even if production capacity is available, that doesn't necessarily translate into barrels reaching international markets," she argued.

"We could see incremental improvements, but I would be cautious about calling it a recovery," she also said.

"Right now, the market is finding ways to buy time, but it hasn't solved the underlying supply problem."

The blockade and disruptions in the Strait of Hormuz, which prior to the war served as a conduit for 20% of global oil supplies, have redrawn global energy flows and infrastructure investment priorities among the region's oil producers.

The CEO of Saudi state ⁠oil giant Aramco, Amin Nasser, said on Tuesday that the company was working to expand ⁠a crude pipeline that circumvents the Strait of Hormuz as the world continues to experience what many describe as the biggest energy supply shock in history.

"With regard to the expansion to our East-West pipeline and the additional networks that we are building, this work has already started," Nasser told analysts on a ⁠call ⁠following the company's results on Tuesday.

The recent tensions between Saudi Arabia and Houthi rebels have also impacted the producers in the region, namely Saudi Aramco, whose infrastructure was targeted.

Consequences of higher energy prices

Also responding to a question about whether retail consumers should worry about fuel shortages at the pumps, and how countries can protect against a bigger energy shock, Brouhard suggested that "it really depends on how much longer this conflict continues."

"If the disruption persists, then yes, the risk of physical fuel shortages increases, particularly for countries that are heavily dependent on imported crude oil and refined products," she noted.

While mentioning that the U.S. is in a "better position" due to domestic production, Brouhard still said that "doesn't mean American consumers are insulated from higher prices, but the immediate supply risks are considerably greater elsewhere."

She also referred to "demand destruction" as consumers and businesses are forced to reduce consumption when fuel becomes expensive, whether by "driving less, cutting industrial activity, or reducing air travel."

"We're already seeing the broader economic consequences of sustained high energy prices, particularly in Europe and parts of Asia," she added.

Citing options for governments, she pointed to strategic petroleum reserve releases, diversifying supply sources, and coordinating international trade flows but said that these are "not permanent fixes."

"Ultimately, there's only so much governments can do to compensate for a prolonged disruption to one of the world's most important energy corridors," she said.

"The longer the Strait of Hormuz remains disrupted, the greater the risk that an energy crisis becomes a much broader economic crisis."