Diesel Prices Hit Five-Year Highs Amid Refinery Outages and Russian Supply Hits

Diesel prices have reached five-year highs, and experts believe this surge may be more than just a temporary blip. According to FreightWaves editor-at-large John Kingston, refinery outages, Russian supply hits, maintenance season, and heating oil demand are all contributing factors.

The ultra-low sulfur diesel futures on the CME settled at what Kingston called effectively the highest price on record, surpassing the 2008 spike and nearly matching a brief post-Ukraine invasion peak. The AAA daily diesel price is around 12 to 13 cents below this record high.

The core supply problem, Kingston explained, is the combined loss of refining capacity from Ukrainian drone strikes on Russian facilities and ongoing disruption at the Strait of Hormuz. Over 1 million barrels a day of refining capacity has been taken offline due to these attacks, which have specifically targeted Russian refineries oriented toward diesel production.

This sustained diesel shock carries broader economic consequences than a gasoline spike, as diesel is used in the production and transportation of almost all commodities. Kingston pointed out that even if diesel's absolute price does not break prior records, the cumulative cost to the economy will likely exceed the toll from the 2008 and 2022 spikes combined.