Diesel Prices Soar Amid Ongoing Middle East Tensions

Global fuel markets are still reeling from the US and Israel's war with Iran that started five months ago. The latest data from the International Energy Agency (IEA) shows that the average per-liter cost of automotive diesel across its tracked countries sits at around $1.94 in US dollar terms, which is roughly 14% above where it was in February before the conflict began.

This price has actually increased despite crude oil prices sliding throughout most of the summer. In contrast, gasoline prices have eased slightly from their peak in May to sit at $1.90 per liter, but remain relatively unchanged from June.

The gap between diesel and gasoline prices can be attributed to the war's impact on tanker traffic through the Strait of Hormuz, which carries around a fifth of the world's oil. The conflict caused a sharp increase in Brent crude prices, which soared from around $72 a barrel to nearly $120 within weeks.

Crude prices have since pulled back, but are still up over 30% from last year. J.P. Morgan now expects Brent to average $86 in the third quarter and drift towards $78 by year-end, assuming the war doesn't escalate again.