US diesel hit a record national average of $6.05 a gallon on Friday, September 11 — up from $5.85 the week before and roughly 60% above pre-war levels in late February. Brent crude traded near $106 a barrel, up from roughly $70 before the war, while WTI held around $101. The jump capped a volatile week: oil had briefly spiked toward $110 a barrel days earlier on reports that Houthi forces seized a strategic Red Sea port, before easing back as markets digested the news. Diesel is outpacing crude because refining capacity can’t keep up the Ukraine and Iran wars have knocked out refineries representing about 5 million barrels a day, cutting global diesel supply by nearly 8% with little spare capacity to fill the gap. US stockpiles are running well below normal heading into winter, with tightness expected to persist through the season.
The core disruption remains the Strait of Hormuz, the passage for roughly a fifth of the world’s oil and gas, where Iranian tanker attacks and Houthi strikes on Gulf refining infrastructure have constrained shipping for months, forcing several producers to declare force majeure on exports earlier in the war. The Houthis’ capture of the Red Sea port added a second pressure point this week, threatening the Bab al-Mandab Strait that Saudi Arabia has used as a workaround, while tit-for-tat strikes including an Iranian attack on a US-used base in Jordan and US strikes on Iranian tankers have kept tensions high. The regional economic toll has been steep and uneven: Iran’s own economy is worst hit, with inflation near 89% and its currency down more than half; Qatar faces a projected 8.6% contraction this year after losing LNG export capacity; and Kuwait’s oil output has nearly halved. Saudi Arabia and the UAE are more insulated thanks to alternative export routes, though both are still absorbing higher shipping and insurance costs.
Beyond the region, higher energy costs are filtering into global transport, food, and goods prices, pressuring consumer spending and pushing some central banks to delay planned rate cuts. Barring a sustained de-escalation and reopening of the strait, analysts expect oil and diesel to stay elevated well into 2027, with the pace of any Gulf recovery hinging largely on how much longer the conflict runs.
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