Key facts
- Oil prices have increased for four consecutive days.
- Diesel futures are approaching record highs, with some benchmarks surpassing previous spikes.
- Refinery capacity offline due to Ukrainian drone strikes on Russian facilities is over 1 million barrels per day.
- Disruptions at the Strait of Hormuz are contributing to supply concerns.
- Heating oil spot prices in New York Harbor have reached a five-year high.
- Regional diesel inventories on the U.S. East Coast are at exceptionally low levels.
Oil prices have climbed for a fourth consecutive day, driven by renewed strikes involving the United States and Iran, which are straining energy flows and diminishing expectations of an imminent resolution. Diesel prices, in particular, are nearing record highs, with some benchmarks surpassing levels seen in 2008 and briefly after Russia's invasion of Ukraine.
According to FreightWaves editor-at-large John Kingston, the current surge in diesel prices has structural backing that could sustain elevated prices for months. Key factors contributing to this include refinery outages, particularly from Ukrainian drone strikes on Russian facilities which have taken over 1 million barrels per day of refining capacity offline, and ongoing disruptions at the Strait of Hormuz. The heating oil spot price at New York Harbor, a benchmark for middle distillates, reached $4.72 per gallon, its highest level in five years.
Kingston noted that the cumulative economic cost of sustained diesel prices could exceed that of the 2008 and 2022 spikes combined, as diesel is crucial for nearly all commodity production and transportation. For trucking companies, the impact is uneven, with empty and backhaul miles lacking surcharge recovery. Regional diesel inventories on the U.S. East Coast are at historically low levels, with California diesel prices breaching $7 per gallon. The crack spread between diesel and crude oil is also at an unprecedented 100%.