Geopolitical conflicts continue to intensify global fuel supply shortages, US diesel prices break $6.50 per gallon for the first time

The Zhitong Finance App learned that US diesel prices continued to rise as geopolitical conflicts exacerbated global fuel supply constraints. According to data from the American Automobile Association (AAA), as of last Saturday, the average price of diesel in the US had risen to 6.505 US dollars per gallon, breaking through 6.5 US dollars per gallon for the first time. Since entering September, the rate of increase in diesel prices in the US has accelerated markedly. So far this month, it has risen by more than $0.87 per gallon, and is rising almost every day.

Shell CEO Wael Sawan said earlier that the refined oil market is facing a “triple threat” posed by attacks on Russian refineries and shipping risks in the Persian Gulf and Red Sea. Since this year, diesel prices have been strongly boosted as the Middle East conflict continues to put pressure on supply. In the Middle East, the ongoing confrontation between the US and Iran has limited energy exports through the Strait of Hormuz — the waterway was responsible for one-fifth of the world's oil and liquefied natural gas shipments during peacetime, while also transporting large quantities of petroleum products. The recent escalation of clashes between Saudi Arabia and Yemen's Houthis has also disrupted Red Sea shipping, which may further increase the extent of restrictions on the supply of refined oil products in the Persian Gulf region.

Meanwhile, Ukraine continues to use drones to attack Russian refineries, further increasing pressure on global supply at a time when Russia bans diesel exports. After being extended, the ban on Russian diesel exports will last at least until September 30, as the Russian government tries to ensure domestic market supply during the Ukrainian attack. Before Ukraine launched an unprecedented round of attacks, Russia was a major diesel exporter, accounting for about 10% of the world's total supply.

Diesel fuels trucks, trains, ships, and heavy equipment, and also drives agricultural machinery, power generation, and home heating. And rising demand for heating and agriculture in the fall could further amplify the impact. As consumers are more sensitive to retail gasoline prices, the rise in diesel is often overlooked, but its impact is transmitted through layers of food, transportation, construction, and commodity prices.

Bob McNally, president of Rapidan Energy, said that diesel is “a more hidden, more expensive, and more influential fuel” and is the true lifeblood of the economy. GasBuddy analyst Patrick De Haan warned that “every truck, every delivery, every package, and every purchase is getting more expensive.” Patrick De Haan said that Americans now spend about $700 million more on gasoline and diesel every day than a year ago. Record diesel prices will affect every shipment, every shipment, and may reignite inflation throughout the supply chain. He also said that diesel prices are at current levels and will become the “silent killer” of the economy.

Consumers have already tasted ahead of time what might happen next through higher gas prices at gas stations. Jeff Lenard, vice president of media and strategic communications at the American Convenience Store Association, said that currently driving up gasoline prices is not only the price of crude oil, but also the price of diesel. The cost of transporting gasoline to gas stations is the main driver behind the continued rise in oil prices.

However, there are still some areas of comfort for truckers and consumers, although the actual experience may not be the case. The American think tank Institute for Progress said that after adjusting for inflation, diesel prices are still below the 2022 high.

The rise in diesel prices may also affect consumers' judgments and confidence levels of inflation, and will continue to be a “stumbling block” for US President Trump and the Republican Party before the midterm elections, as the rising cost of living is causing more and more concerns. As the midterm elections approach, record diesel prices may weaken support for Trump's Republican Party in agricultural states such as Iowa, and may also affect states that rely on household heating oil, such as Maine.

Regarding the high price of diesel, Trump believes that this is not due to the war he launched against Iran at the end of February. Trump posted on social media: “The rise in global diesel prices was mainly caused by the Russian-Ukrainian war, not the war with Iran.”

However, data compiled by the media and estimates cross-checked with diesel traders show that the supply of diesel removed from the market during the US-Iran war exceeded the supply loss caused by the Russian-Ukrainian conflict. According to estimates by energy analysis companies Energy Aspects, Kpler, and Vortexa, diesel supply in the Middle East decreased by an average of about 770,000 barrels per day from March to August this year compared with the same period in 2025. This figure is more than double the loss of Russian diesel supply of about 350,000 b/d during the same period.

It should be pointed out that the impact of the Russian-Ukrainian conflict on diesel supply has expanded in recent months as Ukraine has launched a series of attacks on Russian refineries. In July and August, when Russia imposed a ban on diesel exports, diesel exports fell by 615,000 barrels per day compared to the same period in 2025. This figure is almost equal to the loss of diesel supply in the Middle East.

Crucially, Russian supply losses occurred months after the war in Iran began. Global fuel and crude oil inventories have continued to decline during this period, leaving the market with little buffer space to absorb this shock. At the same time, almost 100% of the world's available refining capacity is currently being used, which means supply-side flexibility is already insufficient.

Eugene Lindell, head of the refined oil products department at consulting firm FGE Nexanteca, said: “In terms of quantity alone, the supply losses caused by the war in Iran are even greater.” “But of course, prices are formed on the margins.” He added that further removing hundreds of thousands of barrels of supply from the market “turned an already extremely tight market into a historically tight market.”

Rachel Ziemba, a part-time senior researcher at the Center for a New American Security, an American think tank, stated, “Supply shortages associated with the Iran conflict are the biggest driver of shortages in the supply of diesel and refined oil products and soaring prices, even though damage to Russian refineries is exacerbating these trends.” “If the cease-fire allows refineries to be repaired and the supply of Russian refined oil products to be restored, it will help ease some of the pressure.”

It is worth mentioning that in a situation where supply continues to be scarce, the upward trend in US diesel prices may be difficult to stop. Jeff Currie, a senior commodity strategist who worked for a long time at Goldman Sachs and founder and CEO of Real Macro, previously warned that as the US energy supply shortage spreads further from refined oil products to the crude oil side, it is “extremely likely” that the US gasoline price will rise to $5 per gallon before the November midterm elections, and the price of diesel may even soar to $7 to $9 per gallon.