US diesel prices remain high despite Trump's moves to boost supplies
USO•The average US diesel price reached $6.28 a gallon, up 70% since the war on Iran began, despite efforts to release emergency reserves and expand access to tax-exempt red-dyed diesel. Retailers have been slow to sell the fuel, while US distillate inventories remain near 23-year lows.
1. Prices and supply measures
The average US diesel price was $6.28 a gallon on Friday, up 70% since the war on Iran began, as wars in Iran and Ukraine have tightened global fuel supplies. The administration has promoted a G7 agreement to release 100 million barrels of oil and petroleum products; a White House official said previously committed barrels would be front-loaded with diesel and released on a tight timeline.
2. Limited uptake of dyed fuel
An executive order allows red-dyed diesel on public roads through year-end and defers the 24.4-cent-per-gallon federal highway tax. Major retailers and marketers have been wary of selling it, citing unclear tax liabilities, logistics and possible fines when trucks cross state lines. The White House said more than 4,000 retailers distribute dyed diesel and that Treasury guidance would clarify the rules.
3. Tight market outlook
Analysts said the global supply of refined products would remain tight while conflicts continue. Rapidan Energy Group President Bob McNally said a durable end to conflicts in the Arabian Gulf and between Russia and Ukraine was the only measure, aside from a recession that reduces consumption, that could put oil prices on a sharp downward trajectory. Baringa economist Caspian Conran described the measures as short-term steps that could provide “probably a few weeks of relief.”
