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Diesel Prices Soar to Record Amid Tight Crude Supply

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Diesel Prices Soar to Record Amid Tight Crude Supply

Diesel prices in the US reached an all-time high on Friday amid crude supply disruptions, likely adding to concerns around sticky inflation.

The average diesel price rose to $5.85 per gallon from $5.7832 on Thursday and $3.7121 a year ago, according to data from AAA, a travel organization that tracks fuel prices in the world's biggest economy.

That surpassed the previous record of $5.82 in June 2022, months after Russia invaded Ukraine, GasBuddy, which also provides fuel price data, said Friday.

Crude oil prices were on track for weekly gains of more than 9% on Friday as hostilities between the US and Iran flared up this week, raising concerns that crude shipments via the Strait of Hormuz will remain disrupted.

"While gasoline prices often dominate headlines, diesel can have a much broader impact on inflation and business costs," GasBuddy said in a statement. "Diesel powers much of the US economy, including freight trucks, trains, agricultural equipment, and construction machinery. As diesel prices rise, transportation costs increase, often leading to higher prices for consumer goods and services."

In California, diesel sold at an average of $7.7094 per gallon, AAA data showed

Regular gas prices averaged $4.1474 per gallon in the US on Friday, compared with $4.1436 the day before and $3.2016 a year ago, AAA data showed.

Annual inflation, as measured by the Federal Reserve's preferred personal consumption expenditure index, held steady at 3.7% in July, data released late last month showed. That's well above the Fed's 2% target.

US consumer sentiment dropped in August amid concerns that inflation will continue to be high for the "foreseeable future," University of Michigan said last week.

"The combination of limited flows in the (Strait of Hormuz) from the US-Iran war, increasing drone strikes on Russia refineries from Ukraine, and a steepening cost curve from rising European natgas have all contributed to the global diesel shortage and rising margins," TPH Research analyst Matthew Blair said in a note e-mailed toThursday.

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