US Diesel Prices Hit Record High Amid Iran War and Supply Disruptions

The average price of diesel in the U.S. hit a record high of $5.85 a gallon on Friday, surpassing the previous record set in June 2022.

This surge is attributed to the six-month war with Iran disrupting global fuel flow and a worldwide refinery shortage, compounded by higher seasonal demand. The price increased from $5.78 on Thursday. The conflict in Ukraine and Ukrainian drone strikes on Russian refineries have further strained global diesel refinery capacity. Russia, a major diesel exporter, has extended its export ban, impacting critically low global reserves.

U.S. refiners have benefited from higher prices due to the loss of Russian supply, with America's total diesel exports hitting an all-time high last month. Higher diesel prices increase transportation costs for goods, potentially impacting consumers and businesses. Regular gasoline prices have also risen, reaching $4.15 a gallon, though not at the same record pace as diesel.

The national average for regular gas has not exceeded $4 a gallon on Labor Day historically. President Trump's administration stated it is committed to lowering prices through efforts to expand refining capacity and maintain control of the Strait of Hormuz. Vice President JD Vance downplayed the impact of the Iran war, suggesting prices could have been higher without U.S. efforts.

National Economic Council Director Kevin Hassett called the rising prices a very short-term thing. The Saudis have increased oil flow through their pipeline to the Red Sea. The war in Iran has also driven up crude oil prices into the $90 range.