U.S. diesel prices have climbed to a record $5.90 per gallon as depleted inventories, near-maximum refinery utilization and major supply disruptions from Russia and the Middle East threaten to keep the market tight through the winter.
By yourNEWS Media Newsroom.
U.S. diesel prices reached a record high Monday as some of the world’s largest oil traders warned that a severe shortage of refined fuels could persist through the winter, with American refineries already operating near maximum capacity and global supplies disrupted by conflicts in Russia and the Middle East.
The national average for diesel reached $5.90 per gallon Monday, compared with $3.70 a year earlier, according to AAA. At the same time, U.S. inventories of distillates, which include diesel and heating oil, stood 14% below their five-year average for the week ending Aug. 28 even as refineries operated at 98% of capacity, according to the Energy Information Administration.
Industry executives gathered at the Asia Pacific Petroleum Conference in Singapore said the problem is increasingly one of refining capacity rather than simply crude-oil availability.
Vitol CEO Russell Hardy estimated that the global market has lost roughly 2 million barrels per day of refined products from Russia and nearly another 2 million barrels per day from the Middle East, according to Reuters. Middle Eastern countries continue exporting about 9 million barrels of crude per day but only about 1 million barrels of refined products.
Refiners are “still not running enough refining capacity to prevent those draws,” Hardy said. “We’re pretty much at the bottom of our stockpiles.”
Phillips 66 Senior Vice President of Global Trading Mark Senn similarly said most U.S. refineries are already operating at full capacity. With diesel inventories low heading into the colder months, he warned that the supply imbalance is likely to keep prices elevated through winter.
The strain is already visible in refining margins. The U.S. diesel crack spread, which measures the difference between the price of diesel and the crude oil used to produce it, surpassed a record $106 per barrel on Sept. 1, according to Bloomberg.
The increase represents a dramatic reversal from expectations at the beginning of the year. GasBuddy forecast in January that diesel would average $3.55 per gallon during 2026.
The effects of expensive diesel extend well beyond what motorists see at fuel stations because diesel powers much of the transportation, agricultural and construction economy.
“Households will feel this less at the gasoline pump than in the price of everything trucks move: groceries, building materials, parcels and heating oil in the Northeast,” Stuart Turley, president and CEO of the Sandstone Group and host of the Energy News Beat podcast, told the Daily Caller News Foundation. “Gasoline near $4.15 nationally is painful versus last year but not the emergency diesel has become. Heating oil customers should shop early. Airlines will keep adding fuel surcharges or trimming capacity on thin routes.”
Global refining data underscore the shortage. Refineries worldwide processed 80.9 million barrels per day in July, nearly 5 million fewer than a year earlier, while 8.3 million barrels per day of Persian Gulf oil production remained offline, the International Energy Agency said in its August oil market report.
The resulting scarcity in distillates pushed Atlantic Basin refining margins to record levels, according to the agency.
Turley said industries heavily dependent on diesel should prepare for high fuel costs to persist rather than expecting a rapid retreat.
Farm and construction operators “should treat $5-plus diesel as the base case for budgets, not a spike that has already peaked,” Turley said. “There is no spare refining capacity sitting idle to rescue a cold December.”
The shortage has been intensified by disruptions to Russian refining and exports. Russia banned diesel exports July 8 after Ukrainian drone strikes damaged refineries and contributed to domestic fuel shortages. Moscow later extended the restrictions through Sept. 30.
The Middle East has simultaneously lost substantial refining capacity amid the war with Iran.
Iran has blockaded the Strait of Hormuz, a waterway that handled roughly one-fifth of global oil supplies before the war began Feb. 28, according to reports. The disruption has placed additional pressure on alternative Gulf export routes and refining operations.
Supply concerns intensified further Tuesday when Iranian-backed Houthi forces attacked Saudi oil facilities, wounding 73 people and temporarily shutting operations at several energy sites.
Those combined disruptions have left global refiners struggling to replenish diesel inventories before seasonal winter demand accelerates. Reuters reported Tuesday that major industry executives expect the market to remain tight through the colder months.
The Trump administration has been pressing the domestic refining industry to expand capacity as fuel prices rise.
President Donald Trump met with refining executives at the White House on Sept. 1, where discussions included regulatory changes, expedited permitting and potential investments to increase U.S. refining capacity, according to a White House official. The meeting came as refiners were already operating near their practical limits and the administration sought ways to increase fuel production.
Ted Ellis, deputy director of energy and environment at the America First Policy Institute, said policymakers should focus on keeping existing supplies moving while pursuing longer-term capacity increases.
The administration should monitor inventories closely and be prepared to remove transportation bottlenecks and use emergency authorities and regional fuel reserves “to keep product moving to consumers,” Ellis said. “The long-term solution closely matches what the administration is already doing: create more supply and more capacity rather than trying to allocate scarcity.”
Ellis said Congress could also address the problem through permitting reform.
Another potential response — restricting U.S. diesel exports to preserve more fuel domestically — could create additional problems because diesel is traded through an interconnected global market, Turley said. U.S. exports have increased even as domestic inventories have fallen to record seasonal lows, according to Bloomberg.
With refineries already operating at extremely high utilization rates, the ability to rapidly increase domestic production remains limited. Maintenance outages, severe winter weather or additional disruptions overseas could therefore put even greater pressure on inventories.
Hardy said the combination of high prices and fuel shortages is already expected to reduce global oil consumption by roughly 1.5 million barrels per day this year compared with 2025.
For U.S. consumers and businesses, the immediate concern is that the record diesel price may not represent a short-lived spike. With inventories depleted, refineries running near capacity and millions of barrels per day of refined-product supply disrupted abroad, industry leaders are warning that the imbalance could remain in place well into winter.
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