Post-War Asphalt Update: Regional Impacts On Tonnage Pricing

The Iran war sent crude oil to its highest quarterly price increase in recorded EIA history, but the impact on binder prices wasn’t equally distributed. Earlier this year, we made some estimates on what these market changes might look like. What actually happened and what could still be coming down the line for contractors as they head into the high-heat of a busy summer paving season?

Firstly, the Midwest region saw the smallest percentage impact as the Kansas DOT reported a 22.8 percent increase from their pre-war baseline. On the east coast, New Jersey contractors are looking at a 42.1 percent rise in asphalt tonnage prices. That is a fundamentally different business environment in the same country, in the same paving season, responding to the same geopolitical event.

The data we gathered from nine state Department of Transportation price indexes suggests a regional structure to the disruption. Three distinct bands have emerged, and they map almost directly onto geography and supply chain architecture.

Crude Oil As Backdrop

The war began Feb. 28 when U.S. and Israeli strikes prompted Iran to close the Strait of Hormuz. Brent crude climbed from $61 per barrel in January to $118 by the end of the first quarter, already the largest quarterly increase on an inflation-adjusted basis in EIA records in almost forty years. Strategic reserve releases from International Energy Agency member states absorbed part of the shock. Crude futures pulled back toward $83 per barrel in mid-June after an “memorandum of understanding” was announced June 14 to formally end the conflict.

Even though the blockade is due to end, and the Strait reopen fully, you likely won’t see the binder prices start decreasing for some time. In fact, it is more than likely that asphalt prices will continue to rise through the summer as the market is still transmitting the shock, not processing the recovery. Experts estimate that it could take until Q1 of 2027 to return to pre-war levels.

Band One: Inland And Western markets (plus 19-to-26 percent)

Kansas and Oklahoma represent the most insulated markets with official data. Kansas climbed from $496 per ton in February to $609 in June, a 22.8 percent increase. Oklahoma moved from $505 to $605, gaining 19.8 percent.

Nevada, representing the Western United States region, publishes weekly data and is current through the week of June 15. It rose 25.3 percent to reach $641.

These three states draw pricing from the Poten and Partners Midwest and Mid-Continent regional market, which anchors supplier surveys to Gulf Coast domestic refinery output rather than coastal terminal imports. U.S. domestic production provided measurable insulation but not complete protection, with approximately 15 to 20 percentage points of relative advantage over Atlantic coast markets.

Band Two: Southeast And Gulf Coast Markets (plus 27 to 29 percent)

Louisiana, Arkansas, and Georgia form a middle band that shows more transmission of the disruption than inland markets, but less than the more northern Atlantic states. Louisiana moved from $562 per ton in February to $717 in June, a 27.6 percent increase. Arkansas climbed from $551 to $701, up 27.2 percent. Georgia tracked closely, moving from $561 to $721, a 28.5 percent increase.

This is particularly significant because it comes the closest to our conservative market estimates made in February, where we reported a possible per tonnage cost of between $750-$800 in Q2. That estimate appears to be mostly accurate, but our moderate estimates predicted a possible rise to $850-$950 per ton in Q3 if the market indexes lagged between 60-90 days. This means the ride is likely not over yet.

All three of these states use Gulf Coast and Mid-South regional pricing from Poten and Partners. The difference between the first band and this one likely reflects the added cost of barge-borne supply from Gulf terminals to Southeast distribution points. These markets are more exposed to coastal terminal pricing than their inland counterparts, but still have the benefit of domestic Gulf Coast refinery supply chains.

There’s another interesting wrinkle, though. The states of Louisiana and Georgia do something interesting in their calculations which could be slightly suppressing the reported average. Louisiana excludes supplier quotes more than 25 percent above the survey average from their index calculations, and Georgia excludes both the highest and lowest prices as a form of outlier exclusion. However, in a market moving as fast as this one, these exclusions dampen index movement relative to what some suppliers may actually be quoting in spot transactions.

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Band three: Atlantic Seaboard markets (plus 41 to 42 percent)

New Jersey and North Carolina pull pricing from East Coast terminal markets, where binder moves by barge from Gulf Coast refineries. The Iran war hit marine freight pricing alongside crude, shrinking profits from both ends of the market process. The Atlantic corridor didn’t have the domestic production buffer to absorb the shock in the same way other parts of the country did.

New Jersey's index climbed from $501 per ton in February to $712 in mid-June, a 42.1 percent increase and the largest percentage gain from the DOT data we gathered. North Carolina moved from $543 to $766, a 41.1 percent increase and the highest confirmed June dollar-per-ton figure in this dataset. For context, North Carolina's June figure of $766 exceeded the peak prices recorded during the Russia-Ukraine disruption in most Midwest markets.

The polymer-modified picture is actually worse. Modified binders have run 15 to 20 percent above standard PG 64-22 throughout the disruption period, consistent with historical relationships. New Jersey's PG 76-22 grade reached $865 per ton in June. North Carolina's asphalt cement terminal price tracked $843.95 per ton.

What This Means For Contractors Across These Regions

Regional price variation of this magnitude creates real bidding complexity for contractors who work across state lines. Escalation clause protection on DOT work partially offsets regional exposure, but private and municipal work without those provisions carries the full impact.

Looking back at the 2022 Russia-Ukraine data, it showed DOT-contracted work absorbed only a portion of crude's price surge compared to the spot market which can face higher and faster pass-through.

Contractors bidding across the inland-to-coastal spectrum also need to know that these markets are not tracking each other. The gap between Kansas and New Jersey has widened from essentially zero in February to 20 percentage points in June. If the conflict resolution brings a faster-than-expected crude recovery, the Atlantic markets should normalize first and fastest. If recovery is slow, the spread could persist into 2027.

Getting Back On The Road

The MOU announced June 14 set a framework for the Strait of Hormuz to fully reopen by June 19. Crude futures responded, falling from their peak above $120 to approximately $83 per barrel as of mid-June. But the indexes will be a different story, as they don’t move as fast as the futures market.

The EIA projects full supply normalization not until early 2027. Refineries that converted capacity away from heavy asphalt fractions toward lighter fuels during the disruption may take longer to reverse course, but only time will tell. The June indexes across all nine states reflect a market still absorbing the shock, not yet processing the recovery, and that will be the key thing to watch in the coming weeks.

July DOT indexes, which will be the first post-ceasefire read for most states, are the next meaningful data point. For Atlantic Seaboard contractors specifically, the July numbers will reveal whether the mid-June MOU announcement is already transmitting into supplier pricing or whether the supply chain lag will carry the spike further into summer.