Retail diesel has never been this expensive

Retail diesel prices reached an all-time high on Friday, with the daily average national retail price for diesel published by AAA set at $5.85 per gallon. This marked a significant increase from the previous all-time high of $5.82 per gallon, set in June 2022, just after Russia invaded Ukraine. The surge in diesel prices began shortly after attacks on Iran, with the price on the Friday before the attacks standing at $3.758 per gallon.

Over the last four days, retail diesel prices have surged by about 25 cents per gallon. The DTS.USA data stream in SONAR for Friday showed a slightly lower average of $5.81 per gallon, following a sharp rise in prices on the ultra-low sulfur diesel contract on CME. ULSD settled at about $4.50 per gallon on August 21, but began to climb after hopes for relief from restricted flow in the Strait of Hormuz diminished.

The latest upward move in ULSD prices occurred after successful drone strikes by Ukraine on Russian refineries, which heavily produce middle distillates such as diesel. Despite the media focus on the all-time high diesel price, its price on CME has softened, declining by 8.86 cents per gallon on Thursday. Kevin Book, managing director of ClearView Energy Partners, emphasized that diesel is a key concern in the energy policy discussion, noting that U.S. refineries are operating at full capacity and that some Middle East supplies are blocked by the closure of the Strait of Hormuz and Russian outages.

While some refinery restarts have occurred, Book expressed skepticism about a quick recovery in diesel prices if the Strait of Hormuz remains closed.