US Diesel Hits Record $6.29 a Gallon as Supply Disruptions Squeeze Markets

Average U.S. diesel prices reached a record $6.29 per gallon this week, up 68 per cent from a year earlier, according to the U.S. Energy Information Administration.

European diesel refining margins edged lower Friday but remained near record levels as disruptions in the Middle East and Russia continued to restrict global fuel supplies. Low-sulphur gasoil futures traded at a premium of $85.34 per barrel over Brent crude, down 30 cents from Thursday’s close and about 7 per cent below the all-time high of $91.67 reached earlier in the week.

The small decline provided little evidence that the shortage was easing. The gap between diesel and the crude used to make it, known as a crack spread, remains wide enough to support strong profits for refiners able to keep plants running. A widening spread indicates refined fuel is growing scarcer relative to crude. The current strain is primarily a shortage of refining capacity and distribution rather than crude itself.

Industry executives estimate disruptions have removed approximately two million barrels per day of refined products from Russia and nearly two million barrels per day from the Middle East. Most remaining refineries are already running close to capacity, so producing more diesel requires plants to run harder, restart damaged equipment or divert output from gasoline.

Shipping constraints are compounding the squeeze. Only four vessels passed through the Strait of Hormuz on Thursday, down from six a day earlier and well below the 10-day average of approximately 16. The waterway normally carries substantial crude and refined-product volumes from Gulf producers to international markets.

European inventories show no meaningful improvement. Gasoil and diesel stocks at the Amsterdam-Rotterdam-Antwerp hub stood almost unchanged at 1.65 million metric tons, with no imports recorded. Eight cargoes are scheduled to arrive before the end of September.

The approach of winter adds pressure, as diesel-related fuels serve heating alongside transport, while seasonal refinery maintenance could remove further capacity.

The latest record follows earlier surges tied to conflict in the Gulf. Diesel powers most heavy trucks, farm machinery and construction equipment, raising costs for harvesting, freight and infrastructure work. Union Pacific Corporation said higher diesel costs were prompting some customers to shift freight from trucks to rail, which is more fuel-efficient over long distances.

Elevated margins can support earnings at refiners including Valero Energy Corporation, Phillips 66 and Marathon Petroleum Corporation, though only if their facilities stay operational. Running plants near maximum capacity increases the financial cost of any unplanned outage.

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