A driver fills up with diesel at a Chevron truck stop in Tracy, California. (David Paul Morris/Bloomberg)
key takeaways:
- US diesel prices rose above $5 a gallon as fuel market tensions increased due to renewed US-Iran hostilities and fuel supply concerns.
- Diesel prices have risen by nearly a third since the war began in late February, while low distillate inventories raise inflation concerns.
- Gasoline prices are near $4 a gallon and the ongoing Middle East conflict and Russian diesel export restrictions could keep pressure on fuel markets.
US drivers are once again paying more than $5 a gallon for diesel, as a fresh round of hostilities in the Middle East stokes fears of more war-induced inflation.
Fuel markets in the US and Europe have been hit hard this week due to the standoff between the US and Iran, which comes just a week after Moscow imposed a ban on diesel exports as Ukraine stepped up attacks on Russian refineries.
The increase in wholesale costs is now being passed on to prices at the pump.
The fuel has risen faster than crude oil since the start of the war, putting pressure on consumers and fueling speculation that the Federal Reserve will soon need to raise interest rates to control inflation.
The rising costs also underscore President Donald Trump’s difficulties ahead of November’s midterm elections, as he struggles to end a war he has said would be short-lived.
U.S. diesel averaged $5.005 per gallon at the pump on July 15, according to AAA motoring group. Prices had fallen in June after tensions eased and an interim peace deal was reached between the US and Iran, but prices have risen again since the beginning of this month. They have increased by a third since the war began in late February.
US gasoline, meanwhile, is again approaching the $4 mark at a time when summer demand typically peaks.
More than four months into the conflict, US inventories of distillates – a category of refined products that includes mostly diesel – are at seasonal lows, and are declining at the time of year when they typically build.
