The budding Middle East war is sending diesel prices soaring in the futures market, with the usual lagging retail market already posting significant gains.
The Department of Energy/Energy Information Administration average weekly retail diesel price, used as the basis for most fuel surcharges, rose 8.8 cents/gallon to $3.897/g, effective Monday, published Tuesday. It is the highest price since July 8, 2024, when it was $3.865/g.
That price now has risen seven consecutive weeks, adding 43.8 cts/g to the benchmark.
But the latest increase, given the usual lag between futures price movements and changes at the pump, would have been reflecting the increases in the price of ultra low sulfur diesel (ULSD) recorded before the joint U.S-Israel attack on Iran and that latter country’s retaliatory steps. The last two days of trading in futures markets and the increases in the pump that can be seen already are signaling gains in the DOE/EIA price have a long way to go.
The price of ULSD on the CME commodity exchange rose Monday to a settlement of $2.9004/gallon for barrels delivered in April. That was a gain of 30.44 cts/g from the April settlement on the prior Friday.
Soaring futures prices Tuesday
But it was trading on Tuesday that led to even more eye-popping numbers.
ULSD settled at $3.1869/g, up 28.65 cts/g, an increase of 9.88%. The settlement was considerably less than the high price of the day, recorded at $3.3692/g.
ULSD settled at just under $2.36/g on February 2, the first trading day of the month. With Tuesday’s settlement, ULSD is now up 82.71 cts/g since then.
Retail price increases were most visible immediately in the AAA daily average price for diesel. The AAA national average Friday was $3.758/g. By Tuesday morning, AAA published a price of $3.891/g, which would be reflecting prices from Monday.
Patrick DeHaan of the Gas Buddy price service, who is on X as @GasBuddyGuy, posted on his feed a list of the largest single-day increases in the average retail price of diesel since 2005. Four of the top five occurred in 2022, when Russia invaded Ukraine. The largest was 22.2 cts/g on March 4 of that year.
His calculation on the current average national price of diesel, posted Tuesday morning, put the number at $3.863/g, just under the AAA price. He said it was the highest price since May 25, 2024 “and will head toward $4/gal.”
Developments in a key passage
Markets have been sent higher by numerous energy-related factors tied to the Middle East war. At the top of the list is likely to be the prospect of restrictions to shipping in the Strait of Hormuz, where 20% of the world’s oil supply can pass through.
