U.S. retail diesel prices exceeded $5 per gallon on Monday, marking only the second occasion that the national average has crossed that threshold, according to data from fuel markets tracker GasBuddy.
Economists have cautioned that a sharp rise in diesel costs could act as a brake on global economic activity. Diesel is a core input for manufacturing and freight; when the cost to produce and transport goods increases, those expenses tend to be passed on to consumers. Analysts are also pointing to potential domestic political consequences, noting that fuel price inflation could present a significant risk to U.S. President Donald Trump as the Republican Party prepares for midterm elections in November.
GasBuddy's data showed the U.S. national average price of diesel topping $5 a gallon on Monday. The sole previous instance of diesel retailing above that mark occurred in December 2022, a period when global oil markets were still reacting to Russia's invasion of Ukraine earlier that year.
Market participants trace the current supply squeeze to the U.S.-Israeli war on Iran, now in its third week. That conflict has disrupted global diesel supply chains because the Middle East is a significant source of both diesel and the grades of crude oil most suited to producing the fuel. Iran's near-complete blockade of the Strait of Hormuz affects an estimated 10% to 20% of total global seaborne diesel supplies, according to the information provided.
In addition, the reduction in Middle Eastern crude shipments to Asian refineries has prompted many of those facilities to lower output, which has further constrained global diesel availability. Leaders in several countries, including measures announced by President Trump and other world leaders, enacted a series of responses intended to ease market stress. Those measures included a record release of oil reserves by industrialized nations, but they have so far had limited success in curbing the rise in fuel prices.
Gasoline prices have also climbed. GasBuddy reported the U.S. national average for gasoline at $3.76 a gallon as of 6:10 p.m. EDT, the highest level since October 2023.
Commenting on near-term prospects, Patrick De Haan, head of petroleum analysis at GasBuddy, wrote in a blog on Monday: "Until we see a meaningful resumption of oil flows through the Strait of Hormuz, upward pressure on fuel prices is likely to persist."
The current episode underscores the sensitivity of refined fuel markets to geopolitical disruptions in key maritime chokepoints and to changes in crude supply patterns that ripple through refinery operations. For sectors that rely heavily on diesel - notably transportation, logistics and energy-intensive manufacturing - the near-term outlook is one of heightened cost pressure until supply conditions materially improve.