A sign displaying the prices of unleaded gasoline and diesel fuel at a 76 gas station in San Francisco on March 19. (David Paul Morris/Bloomberg)
key takeaways:
- According to AAA, US diesel prices fell to $4.98 a gallon on June 24, the first drop below $5 since mid-March.
- Analysts said supply risks linked to the Strait of Hormuz and low stockpiles kept prices higher than $3.76 before the US-Iran war.
- Further price fluctuations will depend on factors including US-Iran talks and potential Russian export restrictions, while US officials continue efforts to curb fuel costs.
The price of diesel in the US fell below $5 a gallon for the first time since mid-March, providing some relief to one of the most important fuels to the global economy.
The national average retail price dropped to $4.98 per gallon on June 24, according to American Automobile Association. That’s down from a high of $5.69 per gallon in April, though still well above the $3.76 per gallon recorded on the eve of the US-Iran war.
Diesel prices rose at the beginning of the conflict, partly because the Strait of Hormuz is an important transit route for fuel produced at refineries in the Gulf region.
This increase has raised costs for businesses and consumers around the world, who rely on diesel for freight transportation, power generation and heating.
“Is this a win for the White House? Yes, from the narrow perspective of prices now versus peak prices in the second quarter,” said Neil Crosby, head of research at market intelligence and analytics platform Sparta. But he added, “There’s still a ways to go to reach pre-war retail prices.”
Crude oil prices have retreated sharply from their wartime highs, pushing diesel down as well. The decline was driven by increased tanker traffic through the Strait of Hormuz, temporary sanctions relief for Iranian oil, and progress in US-Iran peace talks.
The White House has taken several measures to control energy costs, including waiving the Jones Act and reducing the Strategic Petroleum Reserve. Still, the diesel market remains tight, with domestic inventories falling to their lowest seasonal level in decades.
If Russia, normally a major exporter, decides to implement a ban on sending diesel out of the country, there could be further pressure on diesel prices.
President Donald Trump has also ordered the Justice Department to look into gasoline prices, which he says are not falling rapidly.
