NEW YORK, Sept 3 (Reuters) - Average U.S. diesel prices jumped to record highs on Thursday, as a global supply crunch intensified after renewed hostilities between the U.S. and Iran and on disruptions caused by Ukrainian attacks on Russian refineries, a major source of diesel exports.
The national average price of diesel hit $5.820 a gallon, according to fuel price tracking service GasBuddy. This beat the previous high of $5.819 a gallon recorded on June 17, 2022, in the aftermath of Russia's invasion of Ukraine.
Average diesel prices have remained above $5 a gallon since July 15. And 2026 is on track to be the most expensive year for diesel in U.S. history, Patrick De Haan, head of petroleum analysis at GasBuddy, said on X.
Industry watchers warned that already-elevated prices could climb further as seasonal demand picks up. Farmers harvesting crops in the Northern Hemisphere, combined with preparations for planting in the Southern Hemisphere, are expected to boost diesel consumption in the coming months. Demand for heating oil, a distillate fuel similar to diesel, also typically rises ahead of the winter heating season.
Higher diesel prices can ripple through the broader economy because the fuel is widely used in trucking, agriculture and industrial activity. This boosts transportation and production costs that can ultimately raise food prices, Andy Lipow, president of Lipow Oil Associates, said.
Diesel prices are up 55% since the U.S.-Israeli war on Iran started on February 28 and the rally has been driven by mounting concerns over global distillate supplies. Around 900,000 barrels per day of diesel and 350,000 bpd of jet fuel moved through the Gulf before the war, equivalent to roughly 10% and 20% of global seaborne supply, respectively, according to cargo-tracking firm Vortexa.
Reflecting the tightness in the market, the U.S. diesel crack spread, a measure of refining profitability, surged to a record intraday high of $108.02 a barrel on Wednesday. The crack spread was last trading at $101.1 a barrel, down 4.3% from Tuesday after government data on Wednesday showed a modest increase in distillate inventories last week.
Even so, U.S. diesel inventories remained historically low. Distillate stocks, which include diesel and heating oil, averaged their lowest August levels for this time of year since 1982, according to Energy Information Administration data released on Wednesday.
"We're entering a key period for diesel consumption with the lowest inventories on record for early September," said David Russell, Global Head of Market Strategy at TradeStation.
"Farmers and truckers typically use more diesel in the autumn, which raises the stakes for the current crisis and increases the risk of sharper price increases," he said.
U.S. refiners have raised operating rates to multi-year highs to capture strong margins and boost diesel output, but supplies remain constrained by refinery disruptions elsewhere in the world, UBS analyst Giovanni Staunovo said.
Systemic Ukrainian drone attacks on Russian oil refineries led Moscow to ban diesel exports through September 30.
The tightness in diesel supplies is particularly acute on the East Coast, where distillate inventories fell to a record low of 19.3 million barrels in the week ended August 28, according to EIA data, based on data going back to 1990.
The decline is concerning ahead of winter because many homes and businesses in the region rely on heating oil for space heating and power generation.
Reporting by Siddharth Cavale; Editing by David Gregorio
