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Diesel prices spike above $5 a gallon again
Gasoline approaches $4 in summer driving season
Key Takeaways:
- U.S. diesel prices topped $5 a gallon as renewed U.S.-Iran hostilities and fuel supply concerns tightened fuel markets.
- Diesel prices have climbed about one-third since the war began in late February, while low distillate inventories amplify inflation concerns.
- Gasoline prices are nearing $4 a gallon and continued Middle East conflict and Russian diesel export restrictions could sustain pressure on fuel markets.
American drivers are once again paying more than $5 a gallon for diesel, with a fresh round of hostilities in the Middle East raising the specter of more war-induced inflation.
The flare-up between the U.S. and Iran has prompted a severe tightening in fuel markets in the U.S. and Europe this week, coming just a week after Moscow imposed a ban on diesel exports as Ukraine steps up strikes on Russian refineries.
A surge in wholesale costs is now being passed on to prices at the pump.
Fuel has spiked faster than crude since the onset of the war, straining consumers and stoking speculation the Federal Reserve will soon need to hike interest rates to tame inflation.
The rising costs also underscore the bind President Donald Trump is in ahead of November’s midterm elections, as he struggles to wrap up a war he said would be short.
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U.S. diesel averaged $5.005 a gallon at the pump on July 15, according to the AAA motoring group. Prices had retreated in June as tensions eased and the U.S. and Iran reached an interim peace deal, but have rallied again since early this month. They are up by a third since the war started at the end of February.
U.S. gasoline, meanwhile, is again approaching the closely watched $4 mark at a time when summer demand typically peaks.
More than four months of conflict have left U.S. inventories of distillates — a category of refined products consisting mostly of diesel — at seasonal lows, declining at a time of year when they typically build.
