Diesel in California hits $7 as wars in Europe, Middle East strain supply

Key Points:

• Diesel prices in California have surged back to $7 per gallon due to refinery disruptions caused by conflicts in Eastern Europe and the Middle East, with truckers paying about 30 cents more per gallon than a month ago.
• The global diesel supply is constrained by roughly 8% due to Ukrainian drone attacks on Russian refineries, Iran-related disruptions in the Strait of Hormuz, and refinery shutdowns in Saudi Arabia and China.
• Diesel prices in California remain higher than the national average because of reliance on costly crude imports, specialized fuel formulations, and stringent environmental regulations and taxes.
• Refiners are experiencing record profit margins, with the diesel refining margin reaching $100 per barrel, exceeding the price of U.S. crude oil, which is around $85 per barrel.
• Analysts expect diesel prices to stay elevated until damaged refineries in Russia and the Middle East resume full operations, but sanctions and ongoing conflicts may prolong supply outages.