Wholesale diesel costs climb as PPI rises 0.4%; EIA sees US crude hitting a 13.8 million b/d record
The producer price index rose 0.4% last month, with energy and diesel among the costs pushing it up. For a jobber that number is rack cost, and it shows up before you can pass it through to a hauler or a branded lot. Margins on the wholesale side get thin when the input moves faster than the street.
The supply cushion
EIA now forecasts US crude production averaging 13.8 million b/d in 2026, above the 13.7 million b/d record set in 2025. Output already ran 13.7 million b/d in the first half, up about 300,000 b/d, or 2%, from the same stretch last year. Most of the growth is Permian barrels out of Texas and New Mexico plus new projects in the federal Gulf of America.
More domestic crude is a real cushion under US refiners and, downstream, under rack. It does not settle diesel, which trades on distillate cracks and export pull as much as on crude. But when the barrel count keeps climbing, the argument for a sustained wholesale spike gets harder to make on supply alone.
The freight risk
Cutting the other way: oil tanker rates hit record highs as shipping risk around the Middle East climbs. The crude is there. Moving it through the Strait of Hormuz is the problem, with the US-Iran tanker fight running in the Persian Gulf and the Gulf of Oman. Saudi Arabia has started routing cargoes north through the Red Sea and out of Egypt to avoid the strait.
That freight premium is a cost that rides into every waterborne barrel and, eventually, into US import economics on the coasts. IEA also flagged LNG prices climbing on the Hormuz disruption, which is pushing big importers back toward coal for power. That is a gas-and-power story more than a diesel one, but it tells you the risk premium in that region is not easing.
So a jobber is looking at two forces at once. Record US output arguing for softer wholesale over time, and a shipping-risk premium on the seaborne market arguing the other way. Which wins at your terminal depends on how much of your supply is domestic pipeline versus waterborne.
What to watch
Watch the next distillate crack read and whether the PPI energy bump carries into next month or fades as a one-off. Watch whether the Hormuz risk premium keeps tanker rates elevated or the routes around it settle. And watch allocation notices at your rack: if branded supply tightens on the coasts first, that is the early tell that freight, not crude, is setting your cost.