Diesel exceeds $5 in the United States due to war

Yesterday, Monday, the average retail price of diesel fuel in the United States exceeded the level of five dollars per gallon for only the second time in history, in light of the decline in global supplies of this industrial fuel as a result of the ongoing war in the Middle East, according to data from the company that tracks fuel markets, “Gas Buddy.”

Economists warn that the rapid rise in diesel prices may lead to a slowdown in global economic activity, given the heavy reliance of the manufacturing, transportation and shipping sectors on it, which will ultimately be reflected in the prices of consumer goods with an increase in production and transportation costs.

Fuel price inflation may also pose a political challenge to US President Donald Trump, at a time when the Republican Party is preparing to run in the midterm congressional elections next November.

Supply disruptions are weighing on markets

Gas Buddy data showed that the average price of diesel in the United States exceeded five dollars per gallon on Monday, and the only other time this fuel recorded this level was in December 2022, when global oil markets were still suffering from the repercussions of the Russian war against Ukraine earlier that year.

The US-Israeli war on Iran, which has entered its third week, has caused severe disruptions in global diesel supply chains, given that the Middle East is a major supplier of both this fuel and the type of crude oil best suited for its production.

Effects of closing the Strait of Hormuz

The almost complete closure imposed by Iran on the Strait of Hormuz affects between 10 percent and 20 percent of the total global seaborne diesel supply.

The decline in crude oil flows from the Middle East to Asian refineries has also led a number of these facilities to reduce their production, which has increased pressure on the availability of diesel in global markets.

Measures that have not worked so far

So far, a series of measures announced by Trump and other world leaders — including drawing down industrialized countries’ strategic oil reserves — have failed to curb rising fuel prices.

In contrast, the average price of gasoline in the United States was about $3.76 per gallon at 6:10 pm EST, which is the highest level recorded since October 2023, according to Gas Buddy data.

Prices are expected to continue to rise

Patrick de Haan, head of oil analysis at Gas Buddy, said in a blog post on Monday: “Unless oil flows through the Strait of Hormuz resume significantly, fuel prices are likely to continue to rise.”