A wave of refinery outages tied to the Ukraine and Middle East conflicts has pushed diesel prices sharply higher worldwide, with California topping $7 a gallon, Europe now paying more for diesel than jet fuel, and Australia and New Zealand both reporting steep year-on-year increases.
California diesel hit $7 per gallon on Wednesday last week, according to the AAA, up 37% year-over-year, while the U.S. average reached $5.50. Andy Lipow of Lipow Oil Associates estimates the Ukraine and Iran conflicts have knocked out roughly 8% of global diesel supply, driven by a Russian export ban and continued Strait of Hormuz disruption.
The squeeze has also crossed the Atlantic. Reuters reports diesel cargoes are now pricier than jet fuel in Europe as the continent redirects supply toward industry and agriculture. Goldman Sachs analysts flagged a heightened chance of sustained diesel scarcity pricing heading into winter.
The pain extends to Asia-Pacific. IBISWorld forecasts Australian retail diesel will surge 18.6% for the 2025-26 fiscal year, with the country’s roughly 60% import dependence leaving it exposed as regional refining tightens; Australia holds only about 30 days of stock, per the RBA. New Zealand’s Stats NZ recorded diesel increases of 42.6% in March and 36.6% in April, and KiwiRail has nearly doubled its Interisland fuel surcharge on commercial vehicles this year.
IAM Member Impact: Members should expect elevated fuel prices through at least Q4 as rates remain volatile for pending refinery repairs and expanded exports.
Source: CNBC; Reuters; IBIS World; Reserve Bank of Australia; Stats NZ