Diesel surges 44% to $5.13 as Iran conflict disrupts supply chains

The 44% surge in US diesel prices to $5.13 a gallon is pushing up costs for everything from groceries to construction materials, with the Strait of Hormuz closure creating a refining crisis that could persist even after crude markets stabilize.

Diesel prices have surged 44% to $5.13 a gallon since the Iran conflict began, threatening to reignite inflation across the US economy as the Strait of Hormuz closure tightens global supplies of the fuel that powers the nation's freight network.

"From an inflationary perspective, I'm very concerned about the recent rise in diesel prices as it pertains to the cost of food or grocery store prices," Bernard Yaros, lead US economist at Oxford Economics, said. "Diesel powers the irrigation pumps, the tractors in the field and the trucks that bring food from the farm to your local grocery store."

The national average diesel price has climbed from $3.56 in January to $5.13, according to the US Energy Information Administration, while gasoline has crossed $4 a gallon. The 3-2-1 crack spread — a benchmark for refining profitability — hit an all-time high above $70 a barrel, a sign the shock is increasingly a refining story rather than simply a crude supply story, according to JPMorgan's head of global commodities Natasha Kaneva.

With roughly 70% of goods in the US transported by truck at some point, the diesel spike threatens to push consumer prices higher just months ahead of the 2026 midterm elections. A fully loaded semitruck getting 6 to 7 miles per gallon now costs more than $1,280 to fill, and fleets logging over 100,000 miles annually face thousands of dollars in added operating costs.

Strait of Hormuz Disruption Creates Refining Bottleneck

The Strait of Hormuz, through which roughly 20 million barrels of oil and about one-fifth of the world's liquefied natural gas pass daily, has seen shipping traffic fall to a fraction of normal levels. An energy industry source said the closure has been the primary driver of diesel price moves over the past five months.

Unlike crude oil, which can be sourced from multiple global producers, diesel faces a more acute supply constraint. Roughly 2.1 million barrels per day of the 3 million barrels per day of global refinery capacity remain offline, while Russian refinery exports continue to fall after Ukrainian military strikes. Refineries cannot quickly increase diesel production when supplies are disrupted, creating a bottleneck that analysts said could keep prices elevated even after geopolitical tensions ease.

"Refineries don't process crude instantaneously," the industry source said. "A lot of times what you're filling up your car with today was refined a week and a half ago and was produced two months before that."

Trucking Industry Bears the Brunt of Rising Costs

The freight industry is absorbing the sharpest impact. Many trucking firms update fuel surcharges only monthly or quarterly, meaning they cannot immediately pass higher costs to customers. An industry study found that a mid-sized trucking company with 55 trucks in Texas using a monthly fuel surcharge reset could have lost about $168,000 in unrecovered fuel costs during the worst of this year's price surge, and over $400,000 under a quarterly reset schedule.

Smaller carriers, which operate on thinner margins, are most vulnerable. The last time diesel prices exceeded $5 a gallon in 2022, a wave of carrier bankruptcies followed, reducing trucking capacity and further tightening freight markets.

Even if tensions in the Middle East ease, diesel prices may not quickly return to pre-conflict levels because crude must be transported, refined and distributed before reaching consumers. The lag means today's diesel spike could linger long after the headlines fade, pushing costs through supply chains and onto grocery store shelves.

This article is for informational purposes only and does not constitute investment advice.