Middle East: Two Major Developments

Since the outbreak of war and the decapitation operation, YL has established a new three-member body to oversee state affairs, pending the selection of a new leader. The body responsible for the election is called the 'Assembly of Experts', composed of 88 senior Shia jurists. Their term lasts eight years and they are directly elected by the public. Generally, a candidate needs to secure a majority—more than half—of the 88 members to be elected Supreme Leader. The Assembly’s office building has been bombed, with multiple staff members killed or injured; however, the 88 experts themselves are believed to be largely safe. A new leader is expected to be selected this weekend or next week. Given the current domestic political climate in YL, the next Supreme Leader will inevitably be a hardliner. That said, this does not preclude tactical policy adjustments after taking office. If the leadership continues to refuse compromise, it remains vulnerable to further decapitation strikes and risks gradual descent into a semi-underground regime. Secondly, the U.S. Secretary of the Interior revealed that the Trump administration is considering 'all options' to curb soaring fuel prices. Specific measures under discussion include: 1. Deploying the U.S. Navy to escort oil tankers and other vessels safely through the Strait of Hormuz. 2. Coordinating with allied countries to jointly release strategic petroleum reserves to dampen oil prices. 3. Temporarily suspending or relaxing the legally mandated minimum blending ratios of ethanol and other biofuels in gasoline and diesel—thereby lowering refining costs. 4. Direct intervention by the U.S. Department of the Treasury in petroleum futures markets to curb price surges. 5. Coordinating with the U.S. International Development Finance Corporation (DFC) to provide insurance coverage for oil tankers. The Strait of Hormuz employs a two-way separation-of-traffic scheme: two primary channels—one eastbound, one westbound—each approximately 3.2 kilometers (2 nautical miles) wide, separated by a safety buffer zone.

Diesel prices approach record $6.50 per gallon; White House weighs tax suspension and relaxation of 'red diesel' restrictions; export ban still under evaluation

U.S. diesel prices remain persistently high, prompting the Trump administration to weigh multiple intervention measures—including suspending the federal fuel tax and easing regulations on 'red diesel'. A potential export ban remains under discussion but has not been ruled in or out. As of now, no policy decision is imminent; internal deliberations continue. According to Bloomberg, key officials involved in these discussions include Vice President Vance, Energy Secretary Wright, Interior Secretary Bergum, and Treasury Secretary Bessent. Vance has explicitly urged swift action to rein in rising diesel prices and proactively inquired about available policy tools. Meanwhile, Wright indicated that the administration is negotiating with refiners to pursue 'voluntary export reductions' instead of imposing mandatory export restrictions—aiming to avoid industry backlash triggered by direct administrative intervention. These developments have already delivered a clear shock to markets. After Trump publicly voiced support for limiting diesel exports earlier this week, fuel futures experienced sharp volatility. Some refiners have begun inserting protective clauses into contracts to hedge against non-performance risk should an export ban be enacted. Key U.S. allies—including European nations—have also expressed deep concern over the prospect of losing U.S. diesel supplies, warning that such a move would further strain global fuel markets already under tight supply conditions. Pump prices near historic highs prompt state-level action U.S. retail diesel prices currently hover around $6.50 per gallon—approaching all-time highs. Under mounting pressure, several Republican governors have taken preemptive action ahead of any federal decision. Louisiana Governor Jeff Landry declared a state of emergency early this week, suspending penalties for farmers and loggers using off-road diesel on public roads—effective through the end of October. “We will not stand idly by while Louisiana farmers harvest their crops at record-high fuel prices,” Landry stated in his announcement. Alabama Governor Kay Ivey followed suit, directing state law enforcement agencies to suspend enforcement of red diesel restrictions for four months. Nebraska Governor Jim Pillen signed an executive order permitting on-road vehicles registered for highway use to utilize off-road diesel without penalty—and announced diesel tax rebates for vehicles transporting livestock and agricultural products.

Trump Eases Limits on Dyed Diesel in Bid to Cut Fuel Costs

5 days ago

President Trump signed an executive order allowing widespread use of tax-exempt red-dyed diesel to cut fuel costs ahead of midterm elections. While intended to help farmers and rural communities, experts warn of potential supply strain and limited infrastructure impact.

bloomberg

2026-09-23

Trump’s Push for a Diesel Export Ban Threatens to Squeeze Key US Allies

2026-09-23

Trump Considers Ban on US Diesel Exports, Threatening Global Markets

2026-09-23

Diesel Prices Are Spiking; In Battleground States, Voters Are Noticing

2026-09-24

Trump-Backed US Diesel Export Ban Projected to Lower Prices Initially

2026-09-25

Trump's Diesel Export Ban Talk Increases US Export Profitability