U.S. average retail diesel prices crossed $5 a gallon for only the second time ever on Monday as the war in the Middle East squeezes supplies of the industrial fuel, according to fuel markets tracker GasBuddy.
Economists have warned that surging diesel prices could slow global economic activity as the fuel is used in manufacturing and freight, and higher costs to make and move goods are passed on to consumers. Fuel price inflation could also pose a major risk to U.S. President Donald Trump as his Republican Party prepares for midterms in November.
The U.S. national average price of diesel surpassed $5 a gallon on Monday, GasBuddy data showed. The only other time diesel retailed above that mark was in December 2022, when global oil markets were still reeling from Russia’s invasion of Ukraine earlier that year.
The U.S.-Israeli war on Iran, now in its third week, has severely disrupted global diesel supply chains because the Middle East is a major supplier of both the fuel and the type of crude oil most suitable for its production.
Iran’s near-complete blockade of the Strait of Hormuz impacts between 10% to 20% of total global seaborne diesel supplies. Moreover, the slump in Middle Eastern crude oil flow to Asian refineries has pushed many of them to cut production, further hitting global diesel availability.
A string of measures announced by Trump and other world leaders, including a record release of oil reserves by industrialized nations, has done little so far to tame surging fuel prices.
U.S. national average gasoline prices stood at $3.76 a gallon as of 6:10 p.m. EDT, the highest since October 2023, GasBuddy data showed.
“Until we see a meaningful resumption of oil flows through the Strait of Hormuz, upward pressure on fuel prices is likely to persist,” Patrick De Haan, head of petroleum analysis at GasBuddy, wrote in a blog on Monday.
(Reporting by Shariq Khan in New York; Editing by Aurora Ellis)