Topline
Diesel prices in the U.S. rose above $6 per gallon for the first time ever early on Friday, raising fears of more inflation, after renewed fighting between the U.S. and Iran earlier this week pushed both global and U.S. crude oil prices above $100 per barrel once again.
Key Facts
According to the national average diesel price on Friday hit $6.05 per gallon—up from $5.85 last week.
This is the highest ever recorded national average price for diesel on AAA’s tracker and the first time it has breached the $6 mark.
The national average price of diesel was around $3.70 per gallon before the start of the war.
Diesel is a critically important fuel for U.S. industry, agriculture and transportation and the continued spike in price is likely to reverberate across the broader economy.
Diesel is the primary fuel used in heavy machinery and large vehicles like semi-trucks and tractors, and this continued increase can push up shipping, construction and agriculture costs—driving up the prices of groceries and retail goods.
What About Gasoline Prices?
Gas prices, which will have a more direct impact on Americans at the pump, also continued to rise, hitting $4.29 per gallon on Friday, according to AAA’s tracker. While the number remains below the breached in May, it remains well above the pre-war average of around $2.90 per gallon. Gas prices had fallen below $4 per gallon in June after the U.S. and Iran signed an interim peace deal, but they have continued to climb back up since July amid renewed tensions.
Tangent
The global benchmark Brent crude oil futures rose to $104.77 per barrel on Friday, after breaching $100 for the first time since July. The U.S. benchmark West Texas Intermediate crossed $100 for the first time since May on Thursday and remained above that mark on Friday.
What Else Is Causing Diesel Prices To Spike?
Last month, Bloomberg that Russian diesel exports had dropped to a multiyear low in early August amid an increase in Ukrainian drone attacks on Russian refineries. The strikes have prompted the Kremlin to impose a diesel export ban.
This was also echoed in the published on Friday. The report noted that diesel supplies were tighter than those of crude oil because the conflicts in the Middle East and Russia/Ukraine have had a disproportionate impact.
According to the report, the loss of crude oil shipments have been narrowed to just below 45%, due to alternate shipping routes, but diesel supply remains at just above 25% of pre-war levels.
SOURCE: forbesafrica.com
