Diesel crack hits record $99.125 a barrel, closing in on $100
The diesel crack settled at a record $99.125 a barrel yesterday. It jumped more than 11% last week to $92.75 before yesterday's push near the $100 mark. It is running 264% above where it was a year ago. When the crack goes up like this, refiners have every reason to make diesel over gasoline, but the margin is telling you the barrel coming out the other end costs a lot more, and that flows straight into rack and pump diesel.
For haulers, the surcharge is the pressure point. Most freight surcharge tables are pegged to the DOE retail diesel number and reset weekly, so a run like this shows up on carrier invoices with a lag. Shippers who negotiated flat all-in rates eat the gap until the surcharge catches up. Fuel jobbers moving product on their own trucks feel it on both ends: higher cost for the diesel they burn and higher cost for the diesel they sell.
The tanker squeeze
Part of what is feeding diesel is the crude side, and freight on the water is its own story. Very large crude carriers hit record prices in the second quarter, over $130 million for both new and second-hand VLCCs, per Financial Times data from shipbroker Braemar. One-year charter rates for a supertanker also reached the highest on record. Middle Eastern producers are the ones bidding tankers up, and part of the pull is exporters wanting physical control of their own barrels on their own hulls.
President Trump has threatened what he called "tremendous" consequences for countries helping Iran, which puts a sanctions question over Gulf crude flows. Higher tanker rates and sanctions risk both land in the delivered cost of crude, and delivered crude is the front end of every diesel barrel a US hauler eventually buys.
What to watch
Whether the crack actually prints $100 is the near-term signal. It closed at $99.125 and could clear the mark if crude firms or refinery runs tighten, though it may soften if the Middle East premium comes out of the market. Watch the weekly DOE retail diesel print, since that is what most surcharge tables key off, and watch how fast your carriers move their surcharge floors. If VLCC rates hold at these records, the crude cost baked into US diesel stays elevated regardless of what any single refiner does. Carriers locking annual rates right now are the ones with the most exposure if the crack holds up here.