Quartz
US diesel prices have smashed an all-time record of $5.85 a gallon, squeezed by disrupted Persian Gulf supplies and Russia’s diesel export ban.
Diesel prices hit all-time record high of $5.85 a gallon
Author: Cris Tolomia
Friday brought a new benchmark for diesel costs in the United States, with AAA data showing the national average at $5.85 per gallon — a penny above Thursday’s $5.78 reading and enough to eclipse the $5.81 peak recorded in June 2022.
The new record represents a rise of more than 55% since the Iran war began in late February, when diesel averaged $3.76 a gallon. The war prompted Iran to effectively close the Strait of Hormuz, through which about a fifth of the world’s oil normally moves, cutting global crude supplies and straining refinery output across the Middle East.
Gasoline prices also rose, reaching a national average of $4.15 a gallon on Friday, up nearly 40% since the start of the war, according to AAA.
Two overlapping crises are squeezing diesel supplies. In addition to reduced Persian Gulf oil flows, Ukrainian drone attacks have damaged Russian refineries, prompting Moscow to extend a ban on diesel exports through the end of September. Russia has historically been the leading diesel-exporting nation behind the United States, meaning its withdrawal from that trade has opened a notable gap in what global buyers can access. American refiners have stepped into the breach, with U.S. diesel export volumes reaching a record last month, yet worldwide stockpiles remain dangerously thin, according to NBC News.
Seasonal demand is compounding the supply pressure. Agricultural operations draw heavily on diesel to run field machinery — a fuel that also powers 75% of farming equipment by one industry count, according to NPR — while the approach of colder months brings a parallel surge in heating-oil consumption, a product so close in composition to diesel that prices for the two tend to move in tandem.
ING commodities analysts concluded that the combined disruptions in Persian Gulf shipping and Russian exports are removing roughly 20% of the diesel that normally moves by sea. The analysts have identified a recovery in Persian Gulf oil flows or a resumption of Russian exports as prerequisites for any meaningful easing of fuel costs.
The price surge carries broad economic consequences. Because diesel is the primary fuel for long-haul trucking, rail, and maritime shipping, increases in its price work their way into the cost of goods that move through those networks. Joseph Brusuelas, chief economist at RSM U.S., said consumers “should be prepared to pay higher inflation for anything that requires being shipped,” according to NBC News. Food retail stands out as a sector with limited ability to absorb cost pressure, given that supermarket profit margins are already squeezed.
Earlier in the week, President Donald Trump hosted oil-refining executives at the White House, using the occasion to push them on consumer fuel costs — a session White House deputy press secretary Taylor Rogers characterized as a “refine, baby, refine” meeting. As of Friday, no firm pledges from the companies to boost production capacity had been publicly confirmed.
Credits: TCA, LLC.