US Diesel Tops $6 Amid Global Supply Crises
US diesel prices hit a record high of $6.06 per gallon. This spike adds immediate pressure to US inflation data ahead of the upcoming CPI release.
The national average price for diesel fuel in the United States reached $6.06 per gallon on Friday. This figure marks a new all-time high, surpassing the previous record of $5.82 set in 2022. Gasoline prices also rose to $4.29 per gallon, approaching the levels seen in June. These increases are driven by tightening global fuel supplies and geopolitical instability.
Diesel costs have climbed nearly 60% since late February. The rise follows military actions that disrupted energy flows through the Middle East. Russian supply constraints also contribute to the shortage. Ukrainian drone attacks have damaged refineries, while Moscow has extended export bans on diesel and marine fuel. China has similarly restricted fuel exports, further squeezing global refined-product availability.
Inflation Risks Rise Ahead of Data
Higher diesel costs impact agriculture, transportation, construction, and manufacturing. The timing coincides with the peak of the US harvest season. Harvesting activity peaks in October and continues into November. Cooler weather also increases demand for heating fuels. This surge in energy prices comes just before the release of the August US Consumer Price Index.
July consumer prices rose 0.1% month-over-month after a 0.4% drop in June. Annual inflation eased to 3.4% from 3.5%. Energy prices fell 1.5% in July, following a 5.7% decline in June. Despite monthly drops, gasoline prices remain up 24.6% year-over-year. The energy index is up 14.7% over the same period, as noted by GN markets/inflation (en-US).
Global Supply Chains Face Disruption
Brent crude approached $110 a barrel before falling 3% to $104.4. West Texas Intermediate slipped 2.5% to trade below $100. These price movements follow renewed threats to shipping lanes. Restrictions on tanker movements through the Strait of Hormuz remain in place. Increased Iranian attacks on vessels and US strikes on tankers threaten regional supplies.
Security risks are also mounting in the Red Sea. Houthi forces in Yemen have taken control of the Mocha port. This raises concerns over maritime traffic through the Bab el-Mandeb Strait. Some relief emerged after reports of Gulf states seeking a temporary agreement with Iran. The International Energy Agency reported a global oil supply drop of 1.6 million barrels per day in August.
Saudi Production Hits Decade Low
Saudi Arabia accounted for a significant portion of the global supply decline. Total oil production fell by 2.6 million barrels per day. Security risks restricted exports from the country's western coast. Saudi crude supply dropped to 6 million barrels per day. This is the lowest level recorded in more than thirty years. The IEA cites attacks on tanker traffic and energy infrastructure as primary causes.
