Benchmark diesel prices in the US have dropped below $5 per gallon, settling at $4.832 per gallon, according to the Department of Energy/Energy Information Administration's latest weekly average. This marks the first time prices have been under $5 since March 9 and represents the seventh consecutive weekly decline, totaling an $0.808 per gallon slide during this period. However, current prices remain approximately $0.94 per gallon higher than before the Iran war began.
The decline in retail prices follows a significant fall in futures prices. Ultra-low sulfur diesel (ULSD) on the CME commodity exchange settled at $3.0931 per gallon on Monday, a decrease of almost $0.52 per gallon from its recent high of $3.6126 per gallon on June 10. Even with brief surges following news about potential issues with the peace deal concerning the Strait of Hormuz, the overall trend for ULSD and the broader oil market has been downward.
This price reduction is largely attributed to the gradual reopening of the Strait of Hormuz and other policy changes, which have increased global oil supplies. For instance, Iranian crude has been reportedly "flooding on to the global market again" due to the end of the U.S. blockade on exports and the lifting of various U.S. sanctions. Despite these positive developments, some caution remains, as a full return to normalcy is not guaranteed, and potential setbacks could impact the ongoing decline in prices. The EIA also lowered its outlook for global oil demand in 2026, citing factors like high fuel costs and government efforts to curb consumption.
