The average retail price of diesel in the United States topped $6.50 per gallon this weekend amid a worsening global fuel crunch that threatens to hit economies, including the world’s largest.
The national average diesel price jumped to $6.5050 per gallon as of Sunday, according to data from AAA. The price hike to $6.50 from the $6 mark reached only two weeks ago was very steep, as the international Brent oil benchmark remains at $100 per barrel and fuel supply from the Middle East and Russia remains heavily constrained.
A month ago, the average U.S. diesel price was $5.5477 a gallon nationwide. Now it has soared by $1 per gallon in four weeks, after having topped the previous record from 2022 and moving past $6 a gallon for the first time ever.
As a result of the jump in crude oil prices and a worsening global crunch for fuels, U.S. gasoline prices are also rising and are now at a national average of $4.4761 per gallon, up from $4.1044 a month ago, and $3.1894 per gallon at this time last year.
The price spikes in gasoline and diesel could influence voter behavior in the mid-term elections in early November. Moreover, the record-high diesel price could worsen the inflation outlook and slow the economy.
Last week, the Fed raised the key interest rate for the first time since 2023, and Fed Chairman Kevin Warsh said that “The plain fact is that inflation is too high, and has been for too long.”
The surge in diesel prices has started to dominate conversations about slower economic growth and even recession.
Goldman Sachs had a 30% chance of recession within 12 months back in March, at the start of the Middle East conflict. Six months of resilient global and U.S. economies in the face of the supply disruption have lowered the odds to 15% now.
“We’ve scaled back our estimate of 12-month recession risk. We had that at about 30% back in March. We’ve got it at 15% now, but yeah, if we were to see another shock, we’d raise that again,” Jan Hatzius, Goldman Sachs Chief Economist, told Yahoo Finance earlier this month.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
- Pakistan Secures Second Qatari LNG Cargo Through Hormuz After Iran Deal
- Strait of Hormuz Shipping Traffic Falls Further as Saudi Oil Flows Rise
- Oil Prices Head for Weekly Loss as Saudi Export Fears Ease
