US diesel prices have surged past $5 a gallon for only the second time on record as the West Asia conflict involving Iran disrupts supply chains, raising inflation risks and adding pressure on the global economy
Average retail diesel prices in the United States have climbed past $5 a gallon for the second time on record, as the ongoing conflict in West Asia tightens global fuel supplies and raises fresh concerns over inflation and economic growth.
The US national average diesel price breached the $5 mark on Tuesday, a level last seen in December 2022 in the aftermath of the Russia-Ukraine war, when energy markets were thrown into turmoil, data from fuel tracker GasBuddy showed.
The latest spike comes as the US-Israel conflict with Iran enters its third week, disrupting critical supply chains for diesel — a key industrial fuel used in freight, manufacturing, and agriculture.
Supply shock ripples through global markets
At the centre of the disruption is the Strait of Hormuz, one of the world’s most vital energy chokepoints. Iran’s near-total blockade of the passage is estimated to be affecting between 10 per cent and 20 per cent of global seaborne diesel supplies, constraining availability.
The fallout has been swift. Reduced flows of Middle Eastern crude — particularly grades suited for diesel production — have forced refiners in Asia to scale back output, amplifying the global supply crunch.
Analysts warn that the ripple effects could extend well beyond energy markets. Diesel is integral to moving goods across supply chains, and sustained price increases are likely to feed into broader inflation, raising costs for businesses and consumers alike.
Economic and political risks mount
Economists say persistently high diesel prices could weigh on global economic activity, particularly at a time when growth remains uneven across major economies. Higher transport and production costs tend to cascade through supply chains, pushing up prices of essential goods.
The surge also poses a political challenge for US President Donald Trump, as his Republican Party heads into midterm elections later this year. Fuel price spikes have historically been a sensitive issue for voters, often influencing sentiment on economic management.
Limited impact from policy measures
Efforts by Washington and its allies to cool energy markets have so far had limited success. Measures have included coordinated releases from strategic petroleum reserves — among the largest such interventions on record — but these have failed to offset supply disruptions from the conflict.
Gasoline prices have also climbed, with the US national average reaching $3.76 a gallon, the highest since October 2023, according to GasBuddy.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the outlook remains uncertain. “Until we see a meaningful resumption of oil flows through the Strait of Hormuz, upward pressure on fuel prices is likely to persist,” he noted.
With inputs from agencies.
End of Article
Leave a Reply