The national average benchmark price for diesel has fallen below $5 per gallon, reaching $4.832/gallon as of June 22, according to the Department of Energy/Energy Information Administration (DOE/EIA). This marks the seventh consecutive weekly decline, with prices dropping by 22.7 cents from the previous week. This is the first time prices have been below $5/gallon since March 9, which was when the impact of the Iran war on fuel prices initially became apparent. Despite this decrease, the current benchmark price remains approximately 94 cents higher than before the war began.
The decline in retail diesel prices is attributed to a corresponding drop in futures prices for ultra-low sulfur diesel (ULSD) on the CME commodity exchange. ULSD futures have fallen almost 52 cents/gallon since a recent high settlement of $3.6126/gallon on June 10. By June 24, ULSD was down another 4 cents/gallon to $3.0530/gallon. The reopening of the Strait of Hormuz and diplomatic efforts toward an Iran peace deal are contributing to the downward pressure on oil prices, despite some earlier uncertainty regarding the peace agreement.
Optimism for increased global oil supplies is also growing due to Iran "flooding" the global market with crude, following the lifting of U.S. blockades and sanctions on its exports. However, some analysts caution that this surge in Iranian exports might be a temporary "clear-out" of blockaded cargoes, and the export rate could drop again. The EIA also recently lowered its outlook for global oil demand in 2026 by 1.1 million barrels per day, citing high fuel costs and reduced availability, further contributing to the easing of prices. While prices are down, a full return to pre-war levels is still uncertain, with Brent crude projected to average around $70/barrel in 2027 "if the peace holds." This downward trend in diesel prices offers some relief to carriers and owner-operators, but the future remains contingent on global oil market developments and the stability in the Middle East.
