Global Conflicts Drive Up Diesel Prices, Putting Pressure on Farm Economies

Diesel prices are continuing to put pressure on the farm economy despite signs of easing crude oil prices, says Faith Parum, an economist for the American Farm Bureau Federation. According to Parum, a structural supply issue is contributing to the high diesel prices.

The reason for this supply issue lies in various global conflicts, including the war in Ukraine, which has limited Russia's refining capacity. Additionally, the Middle East has reduced its refining capacities due to tensions with Iran, and there are further issues in the Red Sea.

This has resulted in a global shortage of diesel fuel, causing prices to remain high even as crude oil prices show signs of easing. Parum notes that if global conflicts were to calm down, diesel prices would likely decrease. However, this is uncertain due to the complexities and unpredictability of these global issues.