US diesel hits record high as a supply crunch and Brent near $99 push surcharges up
Diesel is at an all-time high nationwide, and for anyone hauling freight that lands straight in the fuel surcharge. The Columbia Missourian reports mid-Missouri drivers feeling it at the pump, and mid-Missouri is not special here. The record is national. Carriers who peg surcharges to the weekly average are about to bill more, and shippers who thought summer was the peak are looking at a higher floor going into fall.
Missing barrels
The reason is supply, and it looks set to stay tight into next year. Vitol chief executive Russell Hardy, speaking at the Asia-Pacific Petroleum Conference, put hard numbers on it: the market is missing roughly 2 million barrels a day from Russia and nearly 2 million a day from the Middle East, and there is not enough refining capacity elsewhere to cover the gap. Reuters cited refining and trading executives saying the crunch could last through winter. Thin refining is also holding diesel margins up, which keeps the wholesale number carriers pay from easing even on days when crude ticks down.
Brent near $99
Crude is doing diesel no favors. Brent has pushed to $99 on Houthi strikes, U.S. strikes on Iranian tankers, and renewed Middle East tension, and OilPrice has prices testing $100. For a hauler, every dollar of Brent that sticks feeds the diesel basis a few weeks later. Crude could ease if the Strait of Hormuz stays open and the strikes pause, but nothing in the last 24 hours points that way yet.
Ocean and bunker
The same war premium is showing up in ocean freight. Trans-Pacific spot rates are near $9,500 a container, and Freightos (NASDAQ: CRGO) says the Iran conflict has pushed bunker fuel back toward mid-year levels, setting a higher cost floor for container lines even as peak-season demand cools. Iran has announced plans for a wider exclusion zone near the strait. For US importers that means the landed cost of goods stays elevated, which is one more thing shippers will try to claw back at the negotiating table with their truckers.
On the retail side, LV Petroleum opened its first Bojangles in Arizona and picked up a site in Oklahoma, part of a push toward 100 travel centers. Higher diesel is a fuel-margin story for travel-center operators and a traffic question for the ones betting on foodservice.
What to watch
The weekly diesel average is the number to watch, since that is what most surcharge tables key off. Watch whether refining margins hold, whether the Houthi strikes and the Hormuz exclusion zone escalate, and whether Brent holds near $99 or backs off if the strait stays clear.