US diesel prices hit record high of $5.85 per gallon as Iran war disrupts global fuel supply

Diesel prices in the United States surged to a record high on Friday as the war in Iran continued to disrupt energy supplies around the world, putting additional pressure on businesses that depend on diesel to power factories, machinery and commercial vehicles. The national average price of diesel reached $5.85 a gallon, according to AAA, marking an increase of more than 55% since the war began. The latest jump pushed prices above the previous record set four years ago during the global energy crisis triggered by Russia’s full-scale invasion of Ukraine.

Other refined petroleum products have also become significantly more expensive. Average US gasoline prices reached $4.15 a gallon on Friday, up nearly 40% since the start of the conflict, AAA data showed. Brent crude, the international benchmark, was trading at around $96 a barrel on Friday, roughly 30% higher than it was when the war began. The rise in diesel prices is particularly significant for the wider economy because diesel powers a large share of commercial transportation and heavy equipment, including freight trucks and farm machinery. Higher fuel costs raise the expense of operating factories and transporting goods, increasing the possibility of higher prices for consumers.

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Some companies have responded by passing those additional costs on to customers through fuel surcharges. UBS has also identified rising diesel prices as an increasing risk for homebuilders, highlighting how the fuel shock could spread beyond transportation and logistics. The latest energy crisis began after the United States and Israel launched attacks on Iran on February 28. Tehran responded by effectively shutting the Strait of Hormuz, the strategically important Persian Gulf passage through which roughly one-fifth of the world's oil and significant volumes of petroleum products typically move.

The disruption to crude oil supplies has also hit refineries, where crude is processed into products such as diesel and gasoline. Missile strikes have damaged refineries in the Middle East, further tightening supplies. Russia's refining sector has also been affected. Ukraine has attacked and damaged several Russian refineries, prompting Moscow to impose a ban on refined fuel exports through the end of September.

The outlook means that a drop in crude prices alone may not immediately translate into cheaper diesel or gasoline. Refinery disruptions, limited spare refining capacity and continuing uncertainty around supplies from the Persian Gulf and Russia could keep refined fuel prices elevated.