U.S. diesel prices reach record $5.85 per gallon amid Iran conflict

Diesel prices in the United States climbed to an average of $5.85 per gallon on Friday, the highest level ever recorded, as the six-month conflict with Iran constricts global fuel flows. The surge follows a jump from about $3.76 per gallon before the war began in late February, according to the American Automobile Association.

Higher diesel costs are expected to raise freight charges for a wide range of goods, from groceries to apparel, and could translate into higher retail prices. Food items that rely on refrigerated transport, such as seafood and fresh fruit, have already shown price increases of 7% and 4.9% respectively compared with a year earlier.

"Early on, much of the cost increase gets absorbed along the supply chain through existing freight contracts and retailer margins," said David Ortega, a professor of food economics and policy at Michigan State University. "But as contracts reprice and fuel surcharges take hold, more of that cost makes its way to the grocery store."

Regular gasoline also rose, averaging $4.15 per gallon, up from $2.98 before the Iran conflict but still below the 2022 peak of nearly $5.02. Analysts attribute the diesel surge to higher crude oil prices, with Brent crude trading above $95 a barrel, up from roughly $70 earlier in the year.

Trucking and logistics firms have begun adding fuel surcharges. Amazon introduced a temporary 3.5% surcharge for some third-party sellers, while UPS, FedEx and the United States Postal Service have applied similar fees.

"Diesel price has a very, very direct impact on everything that moves on pretty much any mode," said Ajesh Kapoor, CEO of trucking-technology company SemiCab.

Energy analysts warn that the combination of rising prices and dwindling refined-product inventories could strain the global supply chain, particularly in regions that depend heavily on Middle-Eastern imports.