Diesel prices hit record highs as wars squeeze global supplies

The United States is considering a ban on diesel exports as prices for the fuel hit record levels this week, driven by wars in the Middle East and Ukraine which have sharply reduced supplies in a global market already struggling with shortages.

Although the price of international benchmark Brent oil has retreated in the past week, from above US$108 a barrel to US$99.25 on Tuesday, it is still more than 35 per cent higher than before the war in Iran began in late February.

Diesel markets are particularly strained, the International Energy Agency noted in its most recent September oil market report. Net exports of diesel and gasoil from Gulf countries averaged 390,000 barrels a day in August, merely a quarter of pre-war levels.

Trump backs diesel export ban as fuel prices hit record highs

That helped push U.S. retail diesel this week to its highest level in 2026, at $6.50 per gallon, according to research firm Rystad Energy.

President Donald Trump said on Tuesday he backed a ban on diesel exports from U.S. refiners to help ease prices of the fuel.

“I’ve said let’s not ​send out the diesel. We make a lot of diesel,” Mr. Trump told reporters ahead of a meeting with Ukrainian President Volodymyr Zelensky.

Economies around the world are highly dependent on diesel. It is critical for a wide range of industrial processes, from farming to mining, and fuels the trucks and ships that transport goods to domestic and global markets. Countries that were already struggling with high inflation, due largely to reduced global energy supplies because of the war in Iran, are now being hit even harder.

Compounding the issue are recent disruptions to Russia’s refining system and a near-halt to its product exports following intensified Ukrainian attacks, the IEA said in its market report.

In the first eight months of 2026, Ukrainian drones have, on average, hit a Russian refinery every three days. As a result, Russian refinery output in June reached its lowest level in more than 20 years, the IEA said, leading the government to restrict exports of diesel to ensure domestic supplies.

Major oil producer Saudi Aramco warned European refiners not to expect crude deliveries next month after a Houthi strike damaged a third pump station on the East-West pipeline near Riyadh airport, Rystad said in an analysis on Monday.

And although Saudi Arabia ‌restarted operations on the line Tuesday, sources told Reuters, global diesel supplies are unlikely to recover anytime soon.

Combined, August net exports of diesel and gasoil from the Middle East and Russia were 1.6 million barrels a day lower than in February when they accounted for almost 45 per cent of global seaborne trade, according to the IEA.

In 2025, the fuel accounted for almost 30 per cent of the world’s total oil consumption. That means rocketing diesel prices will have “major ramifications for diesel consumers and the global economy,” the IEA said in a newsletter this week.

It said even though refineries in the U.S., China and other parts of Asia are ramping up output, “they have been unable to fully offset the declines globally.”

Trump calls on Ukraine to stop attacks on Russian diesel, cites fuel shortage

Central banks have already responded to the inflationary consequences of a prolonged energy shock, Rystad said: the U.S. Federal Reserve last week raised interest rates for the first time since 2023, joining the European Central Bank and the Bank of Japan in tightening monetary policy.

Claudio Galimberti, Rystad’s chief economist, said in an analysis that those moves by central banks are “a rational response to an energy crisis” that cannot be fixed by monetary policy.

“Brent at $100 and diesel at $6.50 a gallon are already squeezing consumers. The key question now is whether this energy shock remains primarily inflationary or starts tipping into something that resembles a slowdown,” Mr. Galimberti said.

The IEA noted in its oil market report that “steep losses of petrochemical feedstocks and refined product supplies, along with higher fuel prices, notably for diesel, will continue to weigh on consumption.”

Between that, the protracted U.S.-Iran diplomatic standoff, and renewed attacks in both the Gulf and the Red Sea, the agency further cut its supply and demand projections for the remainder of the year.

It now projects that world oil supply will average 100.7 million barrels a day in 2026, down 5.7 million barrels year-on-year.

With reports from Reuters