(Sept 11): US diesel futures surged above US$5 (RM20.33) a gallon for the first time since April 2022, the latest sign of a deepening global fuel squeeze as wars disrupt supplies and rapidly erode fuel stockpiles around the world.

Diesel in New York traded as high as US$5.03 a gallon on Thursday as escalating Middle East tensions threaten further disruptions through the vital Strait of Hormuz while Ukrainian drone attacks have forced Moscow to ban exports. Futures prices are now at the equivalent of about US$210 a barrel.

Higher futures prices for diesel, seen as the workhorse of the global economy, typically ripple through to the pump and stoke inflation, creating headaches for central banks and President Donald Trump ahead of the US midterm elections. Diesel is the fuel that powers delivery trucks, machinery and farm equipment.  

The national average for retail diesel prices have already soared to US$5.98 a gallon as of Wednesday, according to the American Automobile Association — the highest on record.

In California, prices averaged US$7.91 a gallon, inching towards the US$8 mark. At five stations in the state, prices are listed at US$9.999 a gallon, according to GasBuddy’s Head of Petroleum Analysis Patrick De Haan. That’s the highest price most stations are physically capable of listing on their signage.

Still, the strain of record-high diesel prices will also be felt in states like Maine — where the highest proportion of households in the country warm their homes with heating oil — and agricultural states like Kansas and Iowa, where diesel fuels farm equipment.

Oil product exports through the Strait of Hormuz are recovering slowly, but they remain well below pre-war levels. And with exports from Russia banned through the end of September, the world is scrambling to secure diesel fuel just as peak demand season kicks off. That’s left the US as the supplier of last resort, drawing down stockpiles to their lowest ever seasonal levels heading into September.

Uploaded by Felyx Teoh