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U.S. average diesel prices rose above $6 a gallon for the first time Friday, adding fresh pressure on inflation as the Hormuz crisis and Russian fuel-supply crunch keep weighing on tightening global fuel supplies.
The national diesel pump price reached $6.06 a gallon, breaking the previous record of $5.82 set in 2022 after the war in Ukraine started. Meanwhile, gasoline prices also rose to $4.29 per gallon, nearing their June level, the American Automobile Association (AAA) reported.
Diesel prices have climbed nearly 60% since late February, when the U.S. and Israel attacked Iran and the resulting war disrupted energy flows through the Middle East.
Russian supply is also under pressure. Ukrainian drone attacks have repeatedly hit Russian refineries, while Moscow has extended its ban on diesel, marine fuel and gas-oil exports through Sept. 30. China has also restricted fuel exports, adding another layer to the squeeze on global refined-product supplies.
Higher diesel costs are putting further pressure on inflation, particularly across agriculture, transportation, construction, mining and manufacturing, where the fuel is widely used.
The timing adds to the pressure as the U.S. heads toward the peak of the harvest season. Harvesting activity reaches its height in October and continues through November, while cooler weather also starts to lift demand for refined products used for residential and commercial heating.
The latest fuel-price surge comes ahead of the release of the U.S. consumer price index for August, due Friday at 3:30 p.m. GMT+3. In July, consumer prices rose 0.1% from the previous month after falling 0.4% in June, while annual inflation eased to 3.4% from 3.5%.
Energy prices fell 1.5% in July after declining 5.7% in June, with gasoline prices dropping 2.9% on a monthly basis. Despite those monthly declines, gasoline prices were still up 24.6% from a year earlier, while the energy index rose 14.7% over the same period.
Having approached $110 a barrel overnight, Brent crude fell about 3% during Friday's session to $104.4 a barrel. U.S. benchmark West Texas Intermediate also slipped 2.5%, taking prices below the $100 mark.
Thursday's increase followed renewed threats to shipping and energy supplies across the region, with restrictions on tanker movements through the Strait of Hormuz still in place. Concerns are growing that increased Iranian attacks on vessels, along with U.S. strikes targeting Iranian oil tankers, could further disrupt regional supplies.
Supply risks are also mounting in the Red Sea, where Iran-backed Houthi forces in Yemen have taken control of the Mocha port, raising concerns over maritime traffic through the Bab el-Mandeb Strait.
However, prices found some relief after a Financial Times report on Gulf states' efforts to reach a temporary agreement with Iran over maritime traffic through the Strait of Hormuz.
The International Energy Agency (IEA), meanwhile, reported that global oil supply fell by 1.6 million barrels per day (bpd) in August from the previous month to 100.1 million bpd, citing attacks on tanker traffic and energy infrastructure in the Strait of Hormuz and Red Sea.
According to the IEA's August Oil Market Report, Saudi Arabia accounted for much of the decline as its total oil production fell by about 2.6 million bpd, while security risks severely restricted exports from its western coast and pushed Saudi crude supply down to 6 million bpd, its lowest level in more than 30 years.
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