Diesel prices are rising for reasons beyond crude oil

The global diesel refining system is stretched

Diesel has become one of the most closely watched indicators in freight transportation, but there’s a growing disconnect between broader energy markets and freight operating costs.

Unlike other market moments, diesel prices have been rising faster than the price of the crude oil from which it’s made. This appears to stem less from crude oil supply and more from diesel-specific market fundamentals.

While U.S. crude production continues to expand, the U.S. Energy Information Administration expects the U.S. inventory of crude-oil distillates, including diesel, to remain below five-year lows through much of 2027. It cited strong export demand and reduced global production of diesel.

The International Energy Agency recently described the global refining system as "stretched to the limit."

This has given rise to rumors of a U.S. diesel export ban. See the Government & Regulations section of this report.

Europe and Asia feel impacts more acutely

Refineries disrupted by the Middle East military conflict, key maritime shipping routes being effectively cut off, and ongoing geopolitical uncertainty highlight the interconnectedness of the global diesel market. Europe continues adapting to the loss of Russian diesel supply, increasing reliance on imports from the Middle East and North America.

In Asia, refined fuel imports dropped to their lowest since the conflict in Iran began, resulting in a heavier reliance on domestic inventories, with some areas facing inflation-driven shortfalls. In response, several Asian countries have introduced fuel rationing, remote-work mandates, and shortened workweeks to conserve dwindling energy supplies and reduce demand.

For U.S. freight transportation, the more immediate concern is often diesel pricing and distribution dynamics. Although widespread shortages have not emerged, isolated supply constraints and higher fuel costs are adding pressure across freight networks for carriers and shippers alike.

The impact is being felt across transportation modes. For truckload carriers, cash flow can be challenging when diesel prices rise faster than shipper fuel surcharges kick in.

Refrigerated transportation is facing even greater pressure, because diesel powers both the truck and the trailer’s refrigeration unit. Elevated diesel prices are also widening the cost gap between truckload and intermodal transportation on many lanes.

What shippers should do

Businesses building 2027 transportation budgets should plan for fuel costs and fuel surcharges to remain elevated relative to historical norms. Even if crude oil prices moderate, diesel refining and supply constraints could keep transportation costs higher well into next year.

A Supply Chain Inspection Report can also help identify ways to optimize your freight transportation, reduce the number of trucks needed for your shipments and reduce the overall number of your shipments.

U.S. average diesel price per gallon

The national U.S. average diesel price per gallon increased to a record high of $6.53 in September which surpassed the previous record high of $5.81 during the week of June 20, 2022.

Mexico average diesel price per liter

The Mexico average diesel price per liter of fuel has been stable, with slight but steady decreases throughout much of the year.

Canada average diesel price per liter

The national average diesel price in Canada, shown here in Canadian cents per liter, increased throughout the third quarter to new record highs.

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