Overview
- AAA reported on Friday that the national average diesel price reached $5.85 per gallon, the highest on record.
- U.S. distillate inventories are at the lowest levels for this time of year in decades, leaving little buffer as demand rises for harvest and winter.
- Renewed hostilities in the Strait of Hormuz, Ukrainian strikes on Russian refineries and Moscow’s diesel export ban have sharply cut global diesel flows.
- U.S. refiners are running near capacity and boosting exports to capture record margins, but limited spare refinery capacity prevents quick physical relief.
- Higher diesel is already raising transport and farm costs and is likely to push consumer prices higher, creating political pressure on the administration and markets to watch Persian Gulf and Russian flows for relief.