Diesel hits all-time high price as Iran, Ukraine wars cut supply

More recently, however, those rising prices have been sustained by an escalation in the fourth year of the war between Russia and Ukraine.

Russia has long been the world’s second-largest exporter of diesel fuel after the United States. But Ukrainian drone strikes on Russia’s oil refineries have cut into the country’s diesel production.

Facing a potential domestic supply shortage, Russia recently extended a diesel export ban through the end of September, straining what were already critically low global diesel reserves.

Russia’s abrupt exit from the world’s diesel export market has been a boon, however, for U.S. refiners, whose diesel products now fetch even higher prices.

America’s total diesel exports hit an all-time high last month as the world scrambled to adjust to the loss of Russia’s supply.

Diesel also faces higher seasonal demand that is compounding the effects of the supply shortages.

Around the world, farmers rely on diesel fuel to power the machines they use for both harvesting and planting. Meanwhile, colder temperatures in the Northern Hemisphere will also create higher demand for refined distillate fuels — the energy category that includes diesel.

Taken together, those forces are increasingly putting diesel prices on a path apart from the rest of the global oil markets.

For U.S. consumers, high diesel prices are likely to translate into higher costs for virtually any goods they purchase.

Diesel powers most major freight transport, from boats to trains to trucks, and those higher input costs are eventually passed along in retail prices, in part or entirely.

“It’s highly likely that transportation companies are not going to be able to absorb 100% of these cost increases,” said Joseph Brusuelas, chief economist at RSM U.S. management consulting company.

“Consumers should be prepared to pay higher inflation for anything that requires being shipped,” he said.

The cost of groceries is likely to be especially hard hit, Brusuelas said, because many supermarkets are already operating on razor-thin margins because of the rising cost of beef.

The latest diesel fuel cost increases could also reverse a trend of stabilizing inflation rates for food at home in recent months.

Diesel fuel products are also used to heat homes across the U.S., and the price surges threaten to increase electricity costs when many households are already stretching their budgets to keep up with soaring utility bills.

On Tuesday, President Donald Trump pressed oil refiners at a gathering at the White House about ways they could relieve the cost burden on end consumers.

“This was not a ‘drill, baby, drill’ meeting,” White House deputy press secretary Taylor Rogers said. “This was a ‘refine, baby, refine’ meeting.”

It was unclear Friday whether the companies had made any concrete commitments to increase refinery output that is already near capacity.

But the issue of rising fuel costs is becoming an increasingly urgent one for the White House. Trump faces growing voter anxiety over the state of the U.S. economy, especially affordability issues, as November’s midterm elections loom.