Historic Second Time! US Diesel Prices Break Through $5 per Gallon - Will All Commodity Prices Surge?

Ask AI · How Will Rising Diesel Prices Affect Daily Living Costs?

Caixin, March 17 (Editor: Bian Chun) According to data from fuel market tracking agency GasBuddy, U.S. retail diesel prices on Monday hit a historic second-time high of over $5 per gallon, due to disruptions in supply caused by the Middle East conflict.

The last time diesel prices exceeded $5 per gallon was in December 2022. At that time, the global oil market was still volatile following the outbreak of the Russia-Ukraine conflict earlier that year.

The Iran-U.S. conflict has now entered its third week, severely disrupting the global diesel supply chain: the Middle East is a major supplier of both diesel and the most suitable crude oil types (medium/heavy sulfur-containing crude oil) for diesel production.

Iran’s near-total blockade of the Strait of Hormuz has affected 10% to 20% of global maritime diesel supplies. Additionally, there has been a significant reduction in Middle Eastern crude oil flowing to Asian refineries, forcing many refineries to cut production, further impacting global diesel availability.

Economists warn that rising diesel prices could slow down the global economy, as diesel is widely used in manufacturing and freight industries, and increased production and transportation costs will eventually be passed on to consumers.

Food prices are also expected to rise as farmers rely on diesel to operate agricultural equipment and transport food nationwide. Construction equipment such as bulldozers, excavators, and dump trucks also use diesel, and most building materials are transported by diesel trucks, which could drive up housing, infrastructure, and renovation costs.

GasBuddy petroleum analyst Matt McClain said, “This kind of rapid and extreme increase in diesel prices is an anomaly in a very short period,” warning that it will trigger chain reactions affecting “the prices of everything.”

“The cost of all products will go up,” said energy economist Philip Verleger.

Meanwhile, U.S. gasoline prices are also rising sharply. GasBuddy data shows that as of Monday afternoon Eastern Time, the national average gasoline price in the U.S. reached $3.76 per gallon, the highest since October 2023.

GasBuddy oil analyst Patrick De Haan wrote in a blog on Monday: “Until there is substantial recovery in oil flow through the Strait of Hormuz, upward pressure on fuel prices may persist.”

Despite the U.S. and other countries announcing a series of measures, including an unprecedented release of oil reserves, these efforts have so far failed to effectively curb the surge in fuel prices.

(Caixin, Bian Chun)