US diesel average price rises to $5.62 per gallon, up 53% from a year ago; supply chain disruption fuels inflation
The average retail price of diesel in the US has risen to $5.62 per gallon, nearing the historical high of $5.82 per gallon set in June 2022, and is up 53% from a year ago.
The supply tightness comes from both ends: the US-Israel conflict affecting oil and refined product transport near the Strait of Hormuz and causing unplanned shutdowns at Middle Eastern refineries; meanwhile, ongoing attacks by Ukraine on Russian refining facilities have reduced the amount of diesel and other distillates available for export from Russia. The Dallas Fed reported that these attacks once impacted up to 2 million barrels per day of Russian crude processing capacity.
Russia was previously a major global diesel exporter, but damage to refining capacity and domestic fuel tightness have led it to tighten refined product exports; although China partially eased fuel export restrictions in July, the additional supply has not fully compensated for the disruptions in Middle Eastern shipping and the reduction in Russian exports.
Diesel demand is entering the Northern Hemisphere's agricultural harvest season. Diesel is used not only for agricultural machinery but also for heavy truck freight, rail, construction, and industrial equipment, so price increases will first translate to agricultural production and logistics bills, and then into retail goods and service prices. In some areas of California, diesel retail prices have already returned to over $7 per gallon.
Refining margins have already reflected the supply gap: the US diesel crack spread once rose to $102.20 per barrel, setting a new historical high. The crack spread measures the gross profit margin for refineries processing crude oil into diesel, and the shortage of refined products has caused its increase to significantly outpace simple crude oil price changes.
In market mechanisms, farmers, truckers, construction contractors, and industrial fuel buyers are passive buyers who can only accept higher fuel costs within their operational and delivery cycles; refiners and traders holding refined product inventories benefit from the crack spread and spot tightness. Fuel costs can be passed on to food, transportation, and end goods prices, but small carriers facing intense competition and fixed orders or unable to hedge fuel prices will bear greater profit pressure.
Source: Public Information
ABAB AI Insight
After the Russia-Ukraine war in 2022, US diesel prices reached $5.82 per gallon in June, similarly not due to a single crude oil shortage, but rather disruptions in Russian refined oil exports, European alternative sourcing, and global refinery configurations. The current price rise to $5.62 reflects a more fragile structure in the distillate market compared to the crude oil market: diesel, jet fuel, and heating oil share distillate refining capacity, and even if crude oil supply can be rerouted, the missing refinery processing capacity and refined product shipping capabilities cannot be quickly compensated.
Capital gains are being redistributed along the "crude oil - refinery - refined product inventory" chain. Upstream oil companies typically benefit from rising oil prices, but when the diesel crack spread rises to $102.20 per barrel, companies with complex refineries, US crude oil supply, and refined product logistics networks can gain higher added profits; this is the refining segment capturing part of the profit pool from crude oil producers during shortages. In contrast, transportation companies and agricultural operators purchase actual fuel that cannot be deferred, rather than financial assets that can wait for price drops.
This is similar to the oil crises of the 1970s and the 2022 European energy shock: the most strained links in the energy market are often not underground crude oil reserves, but rather transport channels, refinery configurations, and regional inventories. The Strait of Hormuz affects shipping routes, and damaged Russian refineries reduce refined product exports, both of which weaken the global diesel arbitrage system. Although the US market has domestic refining capacity, it can be drawn into global pricing due to competition for exportable diesel from Europe and Latin America.
Essentially, this is a restructuring of the industrial chain: the war has shifted energy risk from upstream resource control to midstream processing and logistics control. The mechanism is that global refineries have long optimized for specific crude oil qualities, ports, and trade routes; when key strait shipping is blocked and Russian processing capacity exits, crude oil supply cannot be directly turned into deliverable diesel. Companies with available refineries, inventories, and export terminals hold the spot pricing power, while entities relying on diesel for production and transportation passively accept rising costs.
ABAB News · Cognitive Laws
Crude oil determines cost, refineries determine price
Disruption in one link of the supply chain transmits inflation throughout the chain
Crises elevate oil prices, shortages re-evaluate processing rights