US diesel hits record $5.85 as Iran war and Russian refinery strikes tighten supply
Diesel set an all-time record. AAA put the national average at $5.85 a gallon Friday, up from $5.78 Thursday. For haulers that is a straight cost-per-mile increase, and it feeds into freight rates and then into the price of everything moved by truck.
The cause is supply. Ukrainian drone strikes on Russian refineries have cut into output from the world's second-largest diesel exporter after the US. Add the Iran war, a global refinery shortage, and higher seasonal demand, and the middle of the barrel is where all of it lands. Diesel started climbing in late February when the Iran war began and has not let up since.
For jobbers the near-term problem is margin and allocation. When the rack moves this fast, street price lags and dealer margins get squeezed. Check your supply contracts and watch for any allocation notices from your supplier.
Labor Day at the pump
Gasoline hit a record for the holiday weekend, AAA says, the highest Labor Day prices it has ever tracked. New Jersey pump prices jumped about 20 cents from the week before. Higher pump prices over a heavy travel weekend usually lift c-store fuel volume and inside sales, but whether that helps or hurts fuel margin depends on how fast street price catches the rack.
Crude near $96
Brent was $95.55 a barrel Friday and WTI $91.53, both set for a sharp weekly gain. Iran and the US traded missile strikes this week, and Israel's defense minister threatened to hit Iran's energy infrastructure. Crude could ease if the strikes stop and the Strait of Hormuz stays open. It may run higher if either one breaks the wrong way.
Room in the Permian
Two pipeline expansions added close to 200 Mb/d of crude capacity from the Permian to Corpus Christi. Gray Oak wrapped a two-part 120 Mb/d expansion in May, and Plains All American put its 75 Mb/d Cactus III expansion into service in August. The lines out of the Permian had been packed. This gives the export side a little breathing room, though it does nothing for the diesel crunch, which is a refining and finished-product problem, not a crude-movement one.
E15 in Iowa
Iowa terminals moved more than 46 million gallons of E15 in August, the second-highest monthly total on record. The Iowa Renewable Fuels Association projects E15 could pass E10 as the state's top-selling fuel in 2026. "It will be close, but E15 is on track to become Iowa's top-selling fuel for 2026," said executive director Monte Shaw. For retailers weighing whether to add E15 dispensers, the volume trend is the case for it.
What to watch
Whether diesel keeps climbing turns on the wars. If Ukrainian strikes keep hitting Russian refineries and the Iran conflict drags on, the finished-product tightness could hold or get worse into the fall. Watch the gap between the rack and your street price on both diesel and gasoline through the holiday, because that gap is your margin this week. And watch whether the Corpus Christi capacity pulls any pressure off crude differentials, or whether refining stays the choke point that keeps diesel bid.