US diesel tops US$6.50 a gallon as wars worsen global fuel crunch

US retail diesel prices topped US$6.50 a gallon for the first time, extending a war-driven rally that’s rippling through the economy.

Average nationwide prices rose to US$6.505 as of Saturday, according to the American Automobile Association. The pace of increases has accelerated in September – gaining more than 87 cents so far this month – with prices rising almost every day and surging beyond the peak set in 2022.

Global supplies of the workhorse fuel have been squeezed by the US-Iran war, with shipments through the vital Strait of Hormuz still curtailed. Meanwhile, cargoes of crude oil from the region haven’t fully recovered to pre-war levels, limiting production of fuels from refineries elsewhere in the world.

In addition, Russia has banned most exports of the fuel, and may extend that curb through October, with Ukrainian drone strikes continuing to pound the country’s processors. At the weekend, the Moscow Oil Refinery was hit in an attack that was part of the largest overnight barrage this year.

Most US drivers don’t pump diesel into their cars. But the fuel – which goes into trucks, agricultural equipment, power generators, boats, trains, and home-heating systems – touches nearly every part of the economy.

With midterm elections looming, record diesel prices could erode support for president Donald Trump’s Republican Party in agricultural states like Iowa, as well as states that depend on home-heating oil such as Maine.

Still, there’s some solace for truck drivers and consumers, even if it might not feel like it. On an inflation-adjusted basis, prices are still below their 2022 highs, according to the Institute for Progress, a Washington-based think tank.