The most recent weekly benchmark diesel price has experienced a significant increase, marking the largest upward movement since January and the third-largest surge since the beginning of 2024. The Department of Energy/Energy Information Administration reported a 10 cents/gallon rise in the price effective Monday, reaching $3.571/g. This spike is the most substantial since January 20, with only one larger increase recorded in 2024.
While many attribute the surge in benchmark prices to the ongoing conflict between Iran and Israel, the actual cause may lie in the sharp increase in ultra-low sulfur diesel (ULSD) prices on the CME commodity exchange. Prior to the military action, ULSD prices had been steadily climbing, reaching a settlement of $2.2053/g on Wednesday after starting at $2.0445/g on June 2.
Despite a slight dip in crude prices on Monday, ULSD rose by 3.46 cts/g, reflecting the potential impact of the conflict on oil supplies. This increase in diesel prices, despite the decline in crude, may be due to the heavier grade of Iranian crude, which yields more diesel than gasoline. The front-month spread between ULSD and Brent also reached its highest point since February.
With no signs of the conflict subsiding on Tuesday, ULSD continued to climb, reaching $2.4689 at 10 a.m., a 3.15% increase. This surge could result in the highest ULSD settlement since February 20. The American Automobile Association’s daily estimate of the national average diesel price also rose to $3.567/g on Tuesday, reflecting a 6 cts/g increase from the previous week.
While some stations maintained their prices, others saw significant increases on Monday. Grand Prairie, Texas, recorded a 41-cent rise, while White Hills, Arizona, saw prices increase by 25.1 cents. The ongoing conflict has caused fluctuations in oil prices, with varying reports on the impact on Iranian oil exports.
Despite the climb in oil prices, the International Energy Agency revised its estimate for global oil demand growth in 2025, predicting a rise of 720,000 b/d, down from the previous estimate of 740,000 b/d. The agency also highlighted the imbalance between global supply and demand, favoring buyers as prices continue to rise.
As the situation unfolds, it is essential to monitor the impact of the conflict on oil markets and global supply. The fluctuating prices and uncertain geopolitical landscape emphasize the need for vigilance in the energy sector.
