U.S. diesel reaches record $6 per gallon as Ukraine and Iran conflicts strain supply
Diesel prices in the United States climbed above $6 per gallon, the highest level on record, driven by supply disruptions linked to the wars in Ukraine and Iran.
U.S. diesel prices surpassed $6 per gallon for the first time on Friday, with the national average reaching $6.0556 per gallon, according to AAA data. The increase reflects a 63% rise in fuel costs for truckers and farmers compared with the same period last year. Prices were even higher in California, where diesel cost about $7.98 per gallon.
The surge follows a sharp escalation in fighting between the United States and Iran, which pushed U.S. crude oil futures above $100 per barrel for the first time since May. Futures have risen roughly 20% in September, adding pressure to diesel markets.
"Diesel is the real lifeblood of the economy even though consumers tend to pay more attention to retail gasoline prices," said Bob McNally, president of Rapidan Energy, in an interview with CNBC's The Exchange. He noted that higher diesel costs affect food, consumer goods and energy prices because the fuel powers trucks, trains, ships, farm equipment and, in some cases, home heating and electricity generation.
Patrick De Haan, head of petroleum analysis at GasBuddy, described the price level as a "silent killer" for the economy during a Power Lunch interview. He added that gasoline prices also hit a late-year record of $4.15 per gallon, leading Americans to spend about $700 million more each day on fuel than a year earlier.
Supply disruptions stem from the Ukraine and Iran wars. Kyiv's attacks on Russian refineries have prompted Moscow to ban diesel exports, while Iranian actions and Houthi attacks in the Red Sea have constrained shipments through the Strait of Hormuz. Valero's chief operating officer Gary Simmons said the conflicts have shut down refineries with roughly 5 million barrels per day of capacity.
Andy Lipow, president of Lipow Oil Associates, estimated that the world has lost nearly 8% of its diesel supply, with limited spare refining capacity to offset the shortfall. Helima Croft, head of global commodity strategy at RBC Capital Markets, warned that the situation presents an "enormous challenge" for the administration, noting that U.S. refineries are operating at 98% utilization with little margin for additional output.