Diesel futures surge as market doubts effectiveness of Trump administration's price-lowering measures

U.S. diesel futures rose sharply on Tuesday, climbing about 5% by midday to their highest level in weeks, while European diesel contracts gained roughly 3.8% and gas futures hit year-long highs. The upward movement in futures markets typically signals expectations of higher spot prices in the near term.

Since the February 28 attacks on Iran by the United States and Israel, the average nationwide diesel price has increased by about 70%, with unleaded gasoline up more than 45% over the same period. Crude oil benchmarks have also risen roughly 70% since the start of the year, with Brent near $106 per barrel and U.S. crude around $95.

Gulf Oil adviser Tom Kloza posted on X that wholesale diesel experienced “absolutely stunning price spikes” and warned that a retail price of $6.53 per gallon could be reached by the midterm elections. He noted regional price differences, citing increases of 18 cents per gallon on the Gulf and East Coasts, 28 cents in Southern California, and 25-30 cents in the Great Plains and Great Lakes.

Patrick De Haan, head of petroleum analysis at GasBuddy, also wrote on X that “$6/gal diesel may be here to stay for now,” adding that truckers and farmers are unlikely to see relief soon.

The futures rally followed President Donald Trump’s announcement of a deal with Russian President Vladimir Putin to increase U.S. diesel supplies by purchasing previously sanctioned Russian reserves. Trump said the agreement would add millions of metric tons of diesel to global markets, but analysts estimate the volume would cover less than two weeks of U.S. demand. Kloza interpreted the futures rise as evidence that the market “clearly not believing that Russian oil is on the way.”

The deal also involved a temporary suspension of long-standing sanctions on Russian energy purchases, a move that has faced criticism domestically and internationally. Trump has pressed European allies for additional diesel releases; an October 2 announcement that Europe would temporarily release fuel provided brief price relief, but subsequent clarification from the International Energy Agency indicated no new reserves would be added beyond a March pledge.

In addition, Trump signed an executive order this month easing restrictions on an off-road diesel formulation dyed red and exempt from federal gas taxes. Industry groups cautioned truckers to avoid using the “red dye” diesel until tax implications are clarified. As of Tuesday, the impact of the order on domestic diesel prices or supply remained uncertain.