The key transport fuel has topped $6.50 a gallon as conflicts in Iran and Yemen add to global supply disruptions

US diesel prices have climbed to a new all-time high as disruptions to global fuel supplies and tensions in the Middle East continue to squeeze the market.

The national average reached $6.5107 per gallon ($1.72 per liter) on Monday, according to the American Automobile Association (AAA), up from $6.23 a week ago and $5.58 a month ago. Diesel now costs about 76% more than a year ago.

The global diesel shortage has been exacerbated by the US war with Iran and disruptions to energy flows through the Strait of Hormuz. Houthi advances along Yemen's Red Sea coast have added further uncertainty, raising concerns over shipping through the Bab el-Mandeb Strait and Saudi oil exports.

Supply concerns have intensified as US President Donald Trump weighs his next steps toward Iran. Over the weekend, he said he was considering options ranging from military action to economic pressure or a deal, while signaling openness to meeting Iranian President Masoud Pezeshkian during the UN General Assembly in New York.

Iran's Islamic Revolutionary Guard Corps has warned that another US attack would prompt Tehran to use new weapons and expand the geographical scope of the conflict.

Trump has also pressed Vladimir Zelensky to halt Ukrainian strikes on Russian refineries, arguing that the attacks are worsening the global diesel shortage. On Monday, he again pointed to damage to Russian refining capacity, saying a number of facilities had been knocked out of operation.

At the same time, Washington has tightened sanctions on Moscow. Trump on Friday signed legislation targeting Russia's energy and defense sectors and oil-shipping network while authorizing tariffs of up to 100% on major buyers of Russian oil and gas.

Diesel is crucial to the US economy, powering much of the country's freight transport and farm machinery. Higher prices can therefore feed into the cost of transporting and producing goods, adding to inflationary pressure.

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The surge comes as the Federal Reserve battles persistent inflation. Last week, it raised its benchmark interest rate by 25 basis points to 3.75%-4%, its first increase since 2023. Fed Chairman Kevin Warsh said US inflation remains too high and has persisted for too long.

(RT.com)