- U.S. diesel prices exceed $5 per gallon amid Iran conflict.
- Diesel surge linked to disruptions in Strait of Hormuz shipping.
- Gasoline prices rise to $3.76 per gallon nationwide.
- Higher fuel costs expected to increase inflation and economic pressure.
The US average retail diesel prices surged above $5 a gallon on Monday, only the second time since the 1940s that the data has reached those levels, as the Iran war enter its third week and continues its death grip on world supplies of the industrial oil that drives freight, manufacturing and farming. GasBuddy confirmed the prices.
No other case where diesel had exceeded such a level had ever been recorded before until in December 2022, when the global oil markets were still reeling following the full scale invasion of Ukraine by Russia.
Monday crossing is a direct result of the US-Israeli military action against the Iranian military that commenced on February 28 that has had a devastating effect on the movement of refined petroleum products around the Strait of Hormuz, as well as to the rest of the Gulf region.
A Fuel That Moves Everything
In contrast with gasoline, which only has an impact on individual motorists, diesel is the determining factor in the whole physical economy. It drives the trucks that deliver the goods between warehouses and stores, the ships that transport raw materials across the oceans, the heavy machines on the construction sites and farms, and generators that fulfill the work of the industrial facilities. When the diesel prices start to increase drastically, the cost increase spreads across the economy in practically all spheres within the course of weeks.
Economists have sounded an alarm that ongoing diesel prices of over $5 a gallon would significantly decelerate the US economic activity in the second quarter of 2026 as increased logistics and manufacturing expenses are passed on to consumers through inflation of consumer prices on food, goods and services.
The Federal Reserve that has been indicating the stagnation of rate movements has a more complicated calculation to make since inflation caused by the forces of energy can trigger pressure on the price again.
Highest Since October 2023 Gasoline
The normal gasoline prices have also resumed the continuous upward trend since the commencement of the war. On Monday evening in the US, the national average price per gallon of gas was 3.76, the first rise since October 2023, nearly 80 cents above how it was a month earlier, according to GasBuddy. The state of California had increased to an average of more than 5 per gallon, and Louisiana that has the advantage of local production and refining capacity was at 3.20.
The diesel has increased at even a greater rate as compared to gasoline because the war started, with an increase of up to $1.34 per gallon in one month only, a 37 percent increase as compared to a 27 percent increase in gasoline.
The world crude oil that had been trading in the world market at close to $70 a barrel prior to the outbreak of hostilities surged almost to almost 120 on the very first days of the conflict and then settled around 94 to 100, where it remained mostly unchanged.
The White House has dumped emergency reserves and encouraged trading partners to do the same, but analysts believe that prices will be high until tanker traffic across the Strait of Hormuz is restored at whatsoever will pass as normal trade volumes.
The Republican strategists have quietly realized that the pump price above 4 gallon of gasoline historically hurts the ruling party, thus creating a political pitfall that Trump must limit even in the event that the war enters the fourth and fifth week.
