Global fuel prices surged Thursday as crude oil neared $97 per barrel and diesel reached its highest average price since 2022, driven by two overlapping supply disruptions.
Immediate Developments
International benchmark Brent crude oil climbed for a fourth straight trading session, topping $97 per barrel intraday before settling at $96.20, a gain of 57 cents. U.S. benchmark West Texas Intermediate closed at $91.86 per barrel, up 85 cents. Diesel prices hit $5.78 per gallon, a 53% increase since late February, when the Iran war began. Gasoline averaged $4.14 per gallon, up two cents from Wednesday.
Supply Disruptions Behind the Spike
Two major crises are constricting global diesel supplies. First, tanker traffic in the Strait of Hormuz—a chokepoint carrying roughly 20% of global oil supplies—has plummeted since hostilities erupted. Energy Secretary Chris Wright reported that 17 million barrels of oil transited the strait Monday under U.S. military protection, a wartime record. ING commodities analysts estimate Persian Gulf oil exports are now running at about 50% of pre-war levels.
Second, Russia suspended diesel exports until October after Ukrainian drone attacks damaged refineries inside Russia. Russia, the world’s second-largest diesel exporter, has removed an estimated 20% of global diesel supplies from the market. Combined, these disruptions have removed roughly 20% of the diesel that normally moves by sea.
Economic and Consumer Impact
The surge in diesel prices is raising costs for industries reliant on heavy machinery, including trucking, construction, agriculture, and shipping. Susan Bell, senior vice president of downstream research at Rystad Energy, noted that higher diesel prices will translate into higher costs for consumer goods, particularly groceries transported by truck or rail. AAA reported that since the start of the Iran war, higher fuel prices have cost American households more than $741 on average.
Gasoline prices, though elevated, remain below record levels set in 2022. However, AAA warned that Labor Day travelers will face the highest pump prices on record for the holiday weekend, with the national average for regular gasoline reaching $4.14 per gallon—the first time it has ever eclipsed $4 per gallon on Labor Day.
Policy Responses and Geopolitical Tensions
President Donald Trump met with U.S. oil refiners this week to discuss increasing production capacity, while also striking a deal with Venezuela to secure access to 65 billion barrels of proven oil reserves. However, energy experts cautioned that these measures may take time to affect prices.
Meanwhile, fighting escalated this week when Kuwait’s air defenses engaged Iranian missiles and drones, and the U.S. and Iran exchanged military strikes for the first time since July. Trump stated he does not expect the current hostilities to escalate further or last long.
Market and Analyst Outlook
ING analysts described the overlapping crises as a “wartime record” for oil transit under military protection, while GasBuddy petroleum analyst Patrick De Haan warned that diesel prices are “just a couple of ticks away from hitting a new record.” The surge in crude and diesel prices has driven oil prices up more than 7% this week, with Brent up nearly 10% since Monday.
Analysts warn that the combination of Strait of Hormuz disruptions and Russian export cuts could keep diesel prices elevated through the fall, potentially affecting agricultural costs and food prices ahead of the harvest season.