Diesel Prices to Stay High Despite Potential Oil Price Tumble

The global shortage of refining capacity is causing diesel prices to stay high in the US despite the potential for oil prices to tumble. European Central Bank Vice President Boris Vujcic warned that energy prices, particularly diesel, will likely remain high for a long time and feed into inflation.

The average price of diesel in the US was $6.50 per gallon as of Friday, just below the record high set earlier this week. This is due to the ongoing wars in the Middle East and Ukraine that have squeezed global refining capacity.

Refining capacity has been shrinking globally, with a 6% decrease from year-earlier levels. The US refining capacity had also been declining before the war, falling by over 1% since January 2026. Disruptions in Russia and the Middle East have further reduced fuel availability worldwide.

The closure of the Strait of Hormuz has caused swings in energy prices, but some investors expect oil prices to tumble once it reopens. Ark Invest CEO Cathie Wood predicted that oil prices could fall back to $30 to $35 per barrel over the next few years as output increases in countries with spare capacity.