Diesel Prices May Remain High Through 2027 Amid Global Tensions
Kansas State University agricultural economist Gregg Ibendahl predicts diesel prices will remain high through 2027, affecting farmers and consumers alike. The main factors influencing diesel costs are soaring crude oil prices, limited refining capacity, supply system interruptions, and international conflicts.
The ongoing US-Iran conflict has disrupted shipping in the Gulf region, while Russia's full-scale military assault on Ukraine has weakened its diesel exports. To resolve this issue, Ibendahl says global tensions need to be resolved and fuel shipments normalized.
Ibendahl estimates that even if the war in Ukraine ends quickly and shipments through the Gulf normalize, it could take six months for the market to adjust, with prices potentially taking up to two years to return to pre-war levels. He also notes that one-third of the domestic price escalation is associated with crude oil costs.