Diesel tops $6 a gallon as IEA warns the shortage could run into 2027
Diesel is back above $6 a gallon, FreightWaves clocked a 20-cent jump inside a few hours, and the IEA now says the shortage could persist well into 2027. For anyone hauling fuel or paying a surcharge, that is the number that matters today.
The 20-cent move
Distillate inventories are thin and the market has little cushion. One source quoted by FreightWaves put it bluntly: traders are "running out of bullets." Prices are off the all-time high north of $6.50, so there is room above here if inventories keep drawing.
That feeds straight into fuel surcharges. Carriers index their surcharge tables to the national diesel average, so a 20-cent swing moves the per-mile add-on within days. Shippers who thought surcharges had peaked this summer are looking at another leg up.
Why 2027
The IEA's call is the one to sit with. A tight diesel market for a few weeks is a seasonal annoyance. A structural shortage that runs two more years changes how a hauler prices contracts and how a jobber hedges supply. If the agency is right, the elevated surcharge environment may not be a spike that fades by spring.
The Russian deal
Murkowski and a bipartisan group of senators are pressing Trump to reverse a Russian diesel deal. The detail is thin so far, but any arrangement that adds or removes barrels from the US distillate pool matters directly when inventories are this tight. Worth tracking what the volumes actually are.
Gasoline and CPI
Gasoline is a calmer story. AAA has the national average at $4.3413, up 7.1% last month but basically flat versus a month ago. Economists polled by Reuters expect September CPI at 0.6% on the month, with higher energy costs doing much of the lifting. The official print is due later today. For c-store operators, steady pump prices mean the margin math at the forecourt is less jumpy than the diesel rack.
Somerset biodiesel
Continental Refining is doubling biodiesel capacity at its Somerset, Kentucky complex, with work started in August and completion targeted for November 15. The soybean processing section has been offline since a July 5 fire, and CRC is keeping it shut for the season while it evaluates options. More renewable diesel and biodiesel supply could ease distillate pressure at the margin, though not on a timeline that helps this quarter.
What to watch
The CPI number out today and whether energy drives the surprise. Whether distillate inventories post another draw and push diesel back toward that $6.50 high. And what the Russian diesel arrangement actually involves once the senators force the detail into the open.