U.S. diesel prices have risen sharply due to high crude oil prices, tight global supplies, and elevated refinery margins. As of September 14, the average U.S. retail diesel price reached $6.29 per gallon, the highest nominal level since the EIA began tracking the series in 1994. A high diesel “crack spread,” which measures the profitability of refining crude oil into diesel, has added to the upward pressure.
Global supplies have tightened as refining activity has declined in Russia, China, and the Middle East, pushing up international prices and increasing demand for U.S. diesel exports. Although U.S. refineries have been producing at historically high levels—averaging 5.1 million barrels per day from January through August—strong exports have kept domestic supplies under pressure. U.S. distillate inventories were 13% below the five-year seasonal average as of September 11.
The situation has been worsened by Ukraine’s drone attacks on Russian refineries, which have reduced Russia’s production of gasoline and diesel. Russia has responded with fuel-export restrictions and other measures to ease domestic shortages, but the disruption has also reduced global diesel supplies. With inventories low and global refining capacity constrained, diesel prices are likely to remain under pressure.
High diesel costs are already affecting freight, rail transportation, agriculture, and home heating, increasing costs throughout the economy. The EIA expects global distillate production to remain below last year’s levels in the coming months, while the IEA expects continued pressure on diesel markets if Russian refining capacity remains limited.
