GasBuddy’s live tracker showed diesel breaking its all-time record Thursday afternoon, hitting $5.820 a gallon and pushing past the $5.819 mark set in June 2022, during the energy crisis that followed Russia’s invasion of Ukraine. Diesel has climbed roughly 60% over the past year, up from $3.70 a gallon.
The new record reflects supply pressure on two fronts. In the Middle East, the United States and Iran have spent six months trading strikes over the Strait of Hormuz, a critical artery for oil and fuel shipments, without either full de-escalation or war breaking out.
A wave of Ukrainian drone strikes has knocked out Russian refining capacity, and Moscow responded by banning diesel exports, squeezing global supply from another direction.
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Related: Drone Strikes Push Russia’s Second-Largest Refinery To A Full Stop
Government data shows US diesel stockpiles have never been this thin heading into September, and the East Coast is in the worst shape of any region. The timing makes it worse because September is when diesel demand typically climbs toward its yearly high, as harvest season and Northeast heating-oil needs both draw on the same fuel.
GasBuddy’s Patrick De Haan described a market where “buyers [are] bidding up every drop like a housing market with too few homes.” Diesel futures have been the top-performing commodity in the Bloomberg Commodity Index this year, and Gulf Coast spot prices notched their own record days before Thursday’s retail milestone.
This, just two months before the midterms, is the kind of pocketbook headache Politico says could hurt Republicans this November. Vice President JD Vance faced questions on high fuel costs this week and pointed the blame at Democrats and the Biden administration.
The bigger question for markets is whether the Fed changes course. New Chair Kevin Warsh, who replaced Jerome Powell in May, doesn’t see price growth cooling off yet and has warned the central bank still has “work to do” if that holds. Odds of a September rate hike have shifted noticeably in recent weeks.
