US Diesel Prices Cross $6 a Gallon for First Time as Middle East Conflict Rattles Global Supply
The average price of diesel in the United States has climbed to $6 a gallon, marking the first time fuel costs have reached this level as the conflict involving the US, Israel and Iran, along with disruptions at Russian refineries, place strain on the global supply chain.
According to GasBuddy, the US national average crossed the $6-a-gallon mark on Friday. AAA placed the average price at $5.98 a gallon on the same day, a 61% jump from $3.71 a year earlier.
The price surge has significant implications for trucks, trains, ships, farm machinery and construction equipment that run on diesel. Higher diesel prices can, in turn, drive up the cost of transporting goods and running businesses more broadly.
Meanwhile, benchmark Brent crude oil prices rose past $100 a barrel on Friday amid escalating tensions in the region. Brent crude settled at $107.63 a barrel, while US West Texas Intermediate crude settled at $102.48.
While crude oil remains the primary driver of fuel prices, the recent spike in diesel costs is being compounded by a shortage of refined fuel. The escalating conflict involving the US, Israel and Iran has disrupted oil shipments through the Strait of Hormuz, a critical global energy corridor that typically carries around one-fifth of the world’s oil supply.
Strain in diesel market due to disruptions in Russia’s refining capacity
The diesel market is under additional pressure from disruptions to Russia’s refining capacity, caused by repeated Ukrainian drone strikes on the country’s energy infrastructure. Compounding this, Russia has restricted diesel exports, reducing the fuel available to global markets, while China’s own export restrictions have tightened supplies further. As a result, diesel prices have risen faster than gasoline prices.
According to AAA data, the average US gasoline price stood at around $4.28 a gallon on September 10. This price surge comes even as US refiners continue to operate at high utilisation rates. Data from the US Energy Information Administration shows that US diesel inventories stood at 106.3 million barrels, roughly 13% below the five-year average.