Oil rallies for the week as U.S.-Iran fighting resumes; diesel hits record high

Oil prices were on course to gain over 6% for the week as the U.S. and Iran resumed military exchanges in their conflict, now in its seventh month, while U.S. diesel prices hit a record high.

A 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 warnings that the global economy might be heading for a hard landing.

"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.