Diesel prices climb as drone strikes knock out Russian refineries and Hormuz freight costs jump
Diesel is getting more expensive while the trucks hauling it earn less. FreightWaves' SONAR update shows pump and rack diesel rising even as spot truckload rates keep falling, a split that leaves carriers paying more for fuel with no freight upside to cover it. Part of what's pushing diesel up is refinery output getting squeezed overseas, and that squeeze got worse this week.
Russian refineries hit
Ukrainian drones struck several Russian refining and gas sites overnight on August 24 into 25. Ukraine's General Staff confirmed hits on the Afipsky refinery in Krasnodar Krai and the Astrakhan gas processing plant. The Perm refinery suspended operations after a separate strike, and a storage tank caught fire in Krasnodar. These plants feed Russia's own fuel supply and its export barrels, so every unit knocked offline pulls product out of a global market that US diesel prices track.
Russia doesn't sell much refined product into the US, but diesel is a world market. When Russian export volumes drop, buyers in Europe and Latin America chase barrels elsewhere, and that competition reaches into the same Gulf Coast supply US jobbers draw from. The strikes have been hitting often enough now that the disruption is starting to stack rather than clear between attacks.
Hormuz freight
India's crude import bill has jumped since the Iran war choked Middle East supply, and freight is a big piece of it. Rates to move a cargo through the Strait of Hormuz have quadrupled, and insurance on a single voyage is at record highs. India buys most of its crude from the Gulf, so it feels this first, but the same benchmark crude prices and the same shipping and insurance costs set the floor under what US refiners pay for imported grades.
US crude sailing to Asia
Asian refiners are buying up US crude, per Rigzone. With Middle East barrels dearer and riskier to ship, US grades look cheaper by comparison and the cargoes are heading east. That's good for US producers and export terminals. For domestic buyers it means more of the barrel leaving the country, which can firm up crude prices at home even when headline benchmarks look calm.
What to watch
Whether the Russian refinery strikes keep landing faster than the plants can restart, because that decides if the diesel firmness holds or fades. Watch the Hormuz insurance and freight numbers for any sign the risk premium is easing. And watch US crude exports to Asia, which could keep domestic supply tighter than the crude ticker suggests if the pace holds.