Diesel Price Spikes Outpace Crude Oil, Threatening Inflation Data

The recent spike in diesel prices has significant implications for inflation data and the Federal Reserve's rate hike decisions. US retail diesel set a record of $6.31 on September 16, up 68 percent from a year ago, which is largely attributed to refining shortages rather than crude oil supply issues.

Hormuz took Middle Eastern product exports off the market, Ukrainian strikes disabled about a quarter of Russia's refining capacity, and US East Coast distillate stocks are at a record low. The president acknowledged that the diesel price rise 'is mostly caused by the Russia/Ukraine War.'

The difference between crude oil futures (WTI) and diesel prices is crucial for understanding inflation data and the Fed's rate hike decisions.