Diesel prices spike 7.4% to $4.19 a gallon
Diesel prices have surged globally following refinery attacks in Russia and Saudi Arabia, alongside lingering shipping disruptions in the Strait of Hormuz. US ultra-low-sulfur diesel futures jumped 7.4% to $4.19 a gallon, driven by distillate inventories dropping to three-decade lows. US distillate inventories, which include diesel and heating oil, stood at 107.2 million barrels as of July 31, reaching their lowest level for this time of year in three decades.
European diesel refining margins rose nearly 10%, as traders focus increasingly on shortages of refined products rather than crude itself. The disruptions come on top of the continuing fallout from the closure of the Strait of Hormuz, a critical energy shipping route whose disruption has constrained global flows of crude and refined petroleum products. Russia has also moved to protect its domestic fuel supply by extending restrictions on gasoline and diesel exports through January 2027, further reducing the amount of refined fuel available to international buyers.
The Jazan refinery in Saudi Arabia, which has been offline since July 27, is now expected to resume operations around August 30. The market is particularly sensitive to diesel because refining capacity cannot quickly switch between products. Diesel is also critical to freight transport, agriculture, construction, and industrial activity, meaning prolonged shortages can feed directly into transportation and food costs.
The squeeze illustrates why a disruption to oil infrastructure can hit consumers even when crude prices do not rise by the same magnitude. Refineries must turn crude into usable products such as diesel and jet fuel, and outages can cause the price of those products to spike rapidly when inventories are already low. For consumers, the biggest concern is that diesel could remain under pressure even if crude prices stabilize.
In a related development, Brent and US crude settled about 5% higher as uncertainty persisted over when the Strait of Hormuz might reopen and as Washington and Tehran continued to trade demands over compensation and the conflict. This comes as the global energy market is still reeling from the aftermath of the Ukrainian attack on a refinery in Russia’s Tatarstan region.
This recent surge in diesel prices follows a period of heightened tensions in global energy markets, marked by supply disruptions and geopolitical instability. As the situation continues to unfold, it remains to be seen how the global economy will respond to the challenges posed by the refined-fuel squeeze.
