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Diesel Prices Fall Below $5 a Gallon
Decline to $4.98 Remains Well Above the $3.76 Recorded on Eve of U.S.-Iran War
Key Takeaways:
- U.S. diesel prices fell to $4.98 a gallon June 24, the first drop below $5 since mid-March, according to AAA.
- Prices remain elevated versus $3.76 before the U.S.-Iran war due to supply risks tied to the Strait of Hormuz and tight inventories, analysts said.
- Further price movement will depend on factors including U.S.-Iran negotiations and potential Russian export restrictions, while U.S. officials continue efforts to curb fuel costs.
The cost of diesel in the U.S. fell below $5 a gallon for the first time since mid-March, offering some relief for one of the global economy’s most important fuels.
The national average retail price declined to $4.98 a gallon on June 24, according to the American Automobile Association. That’s down from a peak of $5.69 a gallon in April, though still well above the $3.76 a gallon recorded on the eve of the U.S.-Iran war.
Diesel prices surged at the outset of the conflict, partly because the Strait of Hormuz is a critical transit route for fuel produced at refineries across the Gulf region.
The increase raised costs for businesses and consumers worldwide, who rely on diesel for freight transportation, power generation and heating.
“Is it a White House win? 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 there’s still a “ways to go to get to prewar retail prices,” he added.
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Crude prices have retreated sharply from their wartime highs, pulling diesel lower as well. The decline has been driven by increased tanker traffic through Hormuz, temporary sanctions relief for Iranian oil and progress in U.S.-Iran peace talks.
The White House has deployed a range of measures to contain energy costs, including waiving the Jones Act and drawing down the Strategic Petroleum Reserve. Even so, the diesel market has remained tight, with domestic inventories falling to their lowest seasonal levels in decades.
There may yet be more upward pressure on diesel prices if Russia, typically a major exporter, decides to implement a ban on sending diesel out of the country.
President Donald Trump has also ordered the Department of Justice to look into gasoline prices, which he says aren’t falling fast enough.
