The national average price for U.S. retail diesel hit a new record of $5.820 per gallon on Thursday, narrowly exceeding the previous high of $5.819 set on June 17, 2022. This surge comes as distillate inventories have fallen to multi-decade lows, with East Coast stocks reaching a record low of 19.3 million barrels for the week ending August 28. Supply constraints are exacerbated by global refinery disruptions and export bans, notably Russia's ban on diesel exports through September 30 due to Ukrainian drone attacks on its refineries.
Geopolitical events have significantly impacted prices, with diesel increasing by 55% since the U.S.-Iran conflict began on February 28. This conflict has raised concerns over crucial shipping routes like the Strait of Hormuz, through which substantial amounts of global diesel and jet fuel transit. The U.S. diesel crack spread, a measure of refining profitability, also reached an intraday record of $108.02 per barrel, reflecting the scarcity.
Analysts warn that price pressures are likely to intensify with seasonal demand increases. The upcoming autumn harvest in the Northern Hemisphere and planting preparations in the Southern Hemisphere will boost diesel consumption. Additionally, demand for heating oil, a related distillate fuel, is expected to rise ahead of the winter heating season. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that 2026 is on track to be the most expensive year for diesel in U.S. history.
Despite U.S. refiners operating at multi-year highs to increase output, global supply remains constrained. UBS analyst Giovanni Staunovo indicated that disruptions in other parts of the world are limiting the effectiveness of increased U.S. refining runs. The elevated diesel costs are translating into higher expenses for industries like trucking, construction, and agriculture, ultimately contributing to inflationary pressures on consumer goods.
