Daimler Truck Holding AG has observed that its customers are successfully passing on the higher costs associated with the current diesel price surge, as stated by CEO Martin Daum in an interview on Monday. This comes at a time when US diesel prices reached an unprecedented high of $6 per gallon last week, a significant jump from $3.50 at the start of the year. The wholesale market is seeing prices above $5, indicating further pain at the pump for consumers.
The global diesel crunch is attributed to ongoing conflicts, specifically the US-Iran war and the Russia-Ukraine war, which have severely disrupted supply chains. The US national average price of diesel surpassed $6 a gallon for the first time on Thursday, according to GasBuddy. This escalation in fuel costs is exacerbating inflationary pressures, impacting businesses and consumers alike, and creating a political challenge for US President Donald Trump and Republican lawmakers ahead of midterm elections.
Analysts highlight the pervasive impact of these record prices. Patrick De Haan of GasBuddy noted that "Every truck, every delivery, every package, every grocery run just got more expensive," warning that these prices are likely to "reignite inflation up and down the supply chain." The surge in diesel prices has been dramatic, nearly doubling in five months, with a 60% increase since the US and Israel attacked Iran in late February. This conflict has disrupted oil supply through the Strait of Hormuz, while Ukrainian attacks on Russian refineries and China's export restrictions further tighten global supply.
Despite refiners operating at high utilization rates, US diesel inventories are 13% below their five-year average at 106.3 million barrels. The refining margin for US diesel, known as the crack spread, hit a record $112.17 a barrel on Thursday, according to LSEG data. Linda Giesecke, director of refined products at Rapidan Energy, indicated that distillate inventories are near multi-decade lows for this period and will be challenging to rebuild due to upcoming seasonal refinery maintenance, forecasting elevated and volatile margins into early next year.
