U.S. diesel prices hit record high as supply crunch deepens

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US diesel prices record high

Highlights

U.S. national average diesel price reaches a record $5.820 per gallon on Thursday, surpassing the June 2022 high, driven by supply disruptions.
U.S. diesel crack spread hits a record intraday high of $108.02 per barrel on Wednesday before closing at $101.1, reflecting ongoing tight supply despite a slight inventory build.
East Coast distillate inventories fall to a record low of 19.3 million barrels for the week ended August 28, heightening winter supply concerns as demand is expected to rise.

Record price surge and supply disruptions

As reported by Reuters, the national average price of diesel reaches $5.820 a gallon on Thursday, according to fuel price tracking service GasBuddy. That tops the previous high of $5.819 a gallon recorded on June 17, 2022, after Russia's invasion of Ukraine.

Average diesel prices remain above $5 a gallon since July 15, and 2026 is on track to be the most expensive year for diesel in U.S. history, Patrick De Haan, head of petroleum analysis at GasBuddy, says on X. Diesel prices are up 55% since the U.S.-Israeli war on Iran started on February 28, driven by mounting concerns over global distillate supplies.

Around 900,000 barrels per day of diesel and 350,000 barrels per day of jet fuel moved through the Gulf before the war, equivalent to roughly 10% and 20% of global seaborne supply respectively, according to cargo-tracking firm Vortexa. Supply pressure is also worsening after Ukrainian drone attacks on Russian oil refineries, which lead Moscow to ban diesel exports through September 30.

Economic risks and regional pressure

Industry watchers warn that elevated prices could climb further as seasonal demand picks up. Farmers harvesting crops in the Northern Hemisphere, preparations for planting in the Southern Hemisphere and rising heating oil demand before winter are all expected to lift diesel consumption in the coming months.

Higher diesel prices can spread through the broader economy because the fuel is widely used in trucking, agriculture and industrial activity, increasing transportation and production costs that can eventually raise food prices, Andy Lipow, president of Lipow Oil Associates, says. David Russell, global head of market strategy at TradeStation, says the market is entering a key period for diesel consumption with the lowest inventories on record for early September.

Reflecting tight supply, the U.S. diesel crack spread, a measure of refining profitability, surges to a record intraday high of $108.02 a barrel on Wednesday. It last trades at $101.1 a barrel, down 4.3% from Tuesday after government data shows a modest increase in distillate inventories last week.

Even so, U.S. diesel inventories remain historically low. Distillate stocks, including diesel and heating oil, average their lowest August levels for this time of year since 1982, according to Energy Information Administration data released on Wednesday.

The supply strain is particularly severe on the East Coast, where distillate inventories fall to a record low of 19.3 million barrels in the week ended August 28, based on EIA data going back to 1990. The decline raises concern ahead of winter because many homes and businesses in the region rely on heating oil for space heating and power generation.

Our earlier article covered how the expanding U.S.-Iran war is driving major insured losses for Lloyd’s of London, as attacks in the Gulf increasingly damage onshore energy and other critical infrastructure. It also noted the potential for large political-violence claims and explained that these war-related costs came even as underwriting performance held up amid a softer insurance pricing environment.

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