Diesel Prices Soar as Oil Rally Continues Amid US-Iran Tensions

Oil prices are heading towards a 6% weekly gain despite ongoing military strikes between the U.S. and Iran, but diesel prices continue to soar. According to the American Automobile Association, US diesel prices at the pump reached an all-time high of $5.85 per gallon on Friday, compared to an average of $3.71 a year ago.

Claudio Galimberti, chief economist at Rystad Energy, attributed the high diesel prices to their impact on the economy: 'All sectors of the economy are affected by diesel; this is one of the reasons why the government bond yields in the United States are so high, it's the expectation that inflation will continue to go up.'

Rising demand for diesel during the harvest season and holiday season will further exacerbate the situation. Norbert Rucker, head of economics and next generation research at Julius Baer, noted that the current oil rally is 'mostly mood and fear driven,' with no indication that U.S./Iran hostilities have impacted exports out of the Middle East.