The Zhitong Finance App learned that retail diesel prices in the US have now surpassed the high reached at the beginning of the Middle East war, have risen to the highest level since mid-2022, and are close to historical records. According to data from the American Automobile Association (AAA), the average price of diesel at gas stations across the US rose to $5.783 per gallon on Wednesday, just one step away from the all-time high of $5.816 per gallon set in June 2022. Patrick De Haan, head of petroleum analysis at GasBuddy, an app that helps drivers find low-cost gas stations, said that according to the current upward trajectory, diesel prices seem to break historical records before Labor Day (September 7) next Monday.
Since this year, diesel prices have been strongly boosted as the Middle East conflict continues to put pressure on supply. In the Middle East, the ongoing standoff between the US and Iran has limited energy exports through the Strait of Hormuz. In peacetime, the waterway was responsible for one-fifth of the world's oil and liquefied natural gas shipments, while also transporting large quantities of petroleum products.
Meanwhile, Ukraine continues to use drones to attack Russian refineries, further increasing pressure on global supply at a time when Russia bans diesel exports. After a recent extension, the ban on Russian diesel exports will last at least until September 30, as the Russian government tries to ensure domestic market supply during the Ukrainian attack. Before Ukraine launched an unprecedented round of attacks, Russia was a major diesel exporter, accounting for about 10% of the world's total supply.
Shell CEO Wael Sawan said earlier that the refined oil market is facing a “triple threat” posed by attacks on Russian refineries and shipping risks in the Persian Gulf and Red Sea. Total CEO Patrick Pouyanne pointed out that although some crude oil carriers can still pass through the Strait of Hormuz, no refined oil products can be shipped.
Inventory is also a big problem. According to data released by the US Energy Information Administration (EIA) on Wednesday, US diesel inventories are at their lowest level in history for the same period. This is critical given that September marks the beginning of the high season for diesel demand. Among them, the situation on the east coast of the United States is particularly severe, and local diesel stocks are at their lowest level on record.
Together, these factors drove diesel futures to become the variety with the biggest increase in 2026 in the Bloomberg Commodity Index, and further increased global inflationary pressure. Often referred to as the “workhorse” of the global economy, diesel is needed almost everywhere, from electricity generation and heating to transportation and agriculture.
The rise in diesel prices may also affect consumers' judgments and confidence levels of inflation, and will continue to be a “stumbling block” for US President Trump and the Republican Party before the midterm elections, as the rising cost of living is causing more and more concerns. Earlier this week, in a closed-door meeting, Trump urged refiners to increase domestic diesel and gasoline production.
Global investors are ready for the possibility that the Federal Reserve may raise interest rates to curb inflation. Federal Reserve Chairman Walsh warned at the Jackson Hole Global Central Bank Annual Meeting on Friday that there has been no meaningful slowdown in price increases, and said that policymakers must be convinced that inflation is indeed slowing down, otherwise the central bank “still has work to do.”
Furthermore, refiners are benefiting from soaring diesel prices. In the US, the profit margin for refining crude oil into diesel once hit a historical record of over $100 per barrel. Among refining companies, the stock prices of Valero Energy (VLO.US) and Marathon Crude Oil (MPC.US) have both more than doubled since this year.
Goldman Sachs Group recently further strengthened its warning about the tightening of the global refining market, pointing out that the geographical conflict in the Middle East and the Russia-Ukraine war continued to disrupt the flow of refined oil products, and that the profit forecast for diesel production was more than doubled compared to the previous one. A team of Goldman Sachs analysts pointed out in an August 28 report: “Attacks on refining facilities in the Middle East and Russia have increased, putting further pressure on already tight global energy refining and driving the cracking price spread of refined oil products to a new high. Diesel is still at the core of this round of gains.”
According to the report, the current scale of unplanned shutdowns in global refineries is 60% higher than the seasonal average, and stocks of refined oil products continue to decline even though some demand has been damaged. Goldman Sachs expects that the average refining profit per barrel of diesel in the US market compared to Brent crude oil will reach 63 US dollars next year, and the EU market will be 49 US dollars, which is far higher than the previous forecast of 27 US dollars and 19 US dollars, respectively.