Key facts
- Average U.S. diesel prices hit a record $5.85 per gallon.
- The price increase is linked to the U.S.-Israeli war on Iran and supply disruptions.
- U.S. diesel inventories are at their lowest August levels since 1982.
- Higher diesel costs are expected to increase transportation and production expenses across various sectors.
- The U.S. diesel crack spread reached a record intraday high of $108.02 a barrel.
Average U.S. diesel prices have surged to a record high of $5.85 per gallon, surpassing previous peaks and reflecting the ongoing impact of the U.S.-Israeli war on Iran and broader global supply chain disruptions. This escalation in fuel costs is compounded by Ukrainian attacks on Russian refineries, a significant source of diesel exports, and historically low U.S. distillate inventories.
The surge in diesel prices, up 55% since the conflict with Iran began in late February, is directly linked to rising wholesale oil prices and concerns over global distillate supplies. The U.S. diesel crack spread, a key indicator of refining profitability, has reached record levels. Distillate stocks, including diesel and heating oil, are at their lowest August levels since 1982, with the U.S. East Coast experiencing particularly acute shortages ahead of the winter heating season.
Industry experts warn that prices could climb further as seasonal demand increases due to crop harvesting in the Northern Hemisphere and planting preparations in the Southern Hemisphere. The widespread use of diesel in trucking, agriculture, and industrial activities means higher fuel costs will likely translate into increased transportation and production expenses, potentially driving up prices for a wide range of consumer goods, including food.
In response to rising fuel costs, President Donald Trump has pledged to lower gas prices through an oil deal with Venezuela. The conflict has also led to a ban on Russian diesel exports through September 30 and significant disruptions in key shipping lanes like the Strait of Hormuz.