Oil ends week higher on renewed US-Iran strikes, diesel hits record

The rally in oil prices combined with a much steeper increase in fuel prices has pushed inflation and government borrowing costs higher around the world and intensified fears that global economic growth might pull back without some relief.

"All sectors of the economy are affected by diesel. This is one of the reasons why the government bond yields in the United States are so high, it's the expectation that inflation will continue to go up," said Claudio Galimberti, chief economist at Rystad Energy.

Average U.S. diesel prices hit record highs as renewed U.S.-Iran hostilities and Ukrainian attacks on Russian refineries increased supply disruptions. A gallon of diesel now costs $5.85 on average in the U.S., according to AAA data.

The price of diesel could rise even further due to the sharp drawdown in inventories and as agricultural states in various parts of the country head into harvesting and planting seasons. Diesel is a primary fuel for ag equipment. Its equivalent futures contract, heating oil, has also surged as winter approaches.