Diesel Prices Soar Amid Global Supply Disruptions
US diesel prices have reached their highest since April, driven by global supply disruptions caused by conflicts in Iran and Ukraine. The national average price has surged to around $5.82 a gallon, with California pumps reaching as high as $7 a gallon.
The conflict in Ukraine and the ongoing tensions in the Middle East have disrupted about 8% of the global oil demand, contributing to the sharp increase in diesel prices. According to CNBC's market analysis, Brent crude has risen by 26.4% since the war began, while ultra-low-sulphur diesel (ULSD) futures have increased by 71.5%, settling at $4.48 a gallon on CME.
The squeeze on global supply is having a ripple effect on economies that import most of their petroleum products. In Kenya, for example, the Energy and Petroleum Regulatory Authority has cut the maximum diesel price by 5 shillings to 217.86 shillings a liter for the August-September cycle, but this relief may be short-lived as global prices continue to rise.
The impact of higher diesel prices is already being felt in various sectors, including transportation and logistics. Economists at the University of Virginia's Darden School warn that fuel shortages and freight surcharges will have a significant effect on household budgets and business operations.