The global oil price rose for a fourth straight session on Thursday and the cost of U.S. diesel fuel came within pennies of its highest level ever, as renewed strikes by the United States and Iran strained the flow of energy.
“Escalation in the Middle East dashes any hope for a recovery in refined product flows, leaving markets tight,” analysts at the bank ING wrote in a note on Thursday.
Shipping in the Strait of Hormuz, a narrow waterway between Iran and Oman that normally carries a fifth of the world’s oil, has been mostly at a standstill. The U.S. Navy, which is blockading Iranian oil at sea from exiting the region, is helping ships navigate the strait, allowing some oil to flow. But two tankers were attacked on Monday off the coast of Oman, highlighting the persistent risk for ships seeking to export oil from the Persian Gulf.
The Trump administration has sought to play down the disruption. The U.S. energy secretary, Chris Wright, said oil passing through the strait reached prewar levels in recent days. Independent firms that track shipping were skeptical.
“Ship trackers have been estimating much more modest flows,” the ING analysts wrote. “It makes more sense to look at average flows over longer periods, rather than a single day, given flows move lots day to day.”
Oil continues to rise.
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The price of Brent crude, the global benchmark for oil, was up 1 percent to nearly $97 a barrel. The cost of crude has risen 34 percent since the start of the war.
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West Texas Intermediate crude, the U.S. benchmark, was up more than 1 percent to around $92 a barrel.
Diesel prices surge.
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The average price of diesel in the United States jumped nine cents to $5.78 per gallon on Thursday, according to the AAA motor club, up 54 percent since the start of the war. The last time U.S. diesel prices approached this level was in 2022, after Russia’s full-scale invasion of Ukraine, peaking at $5.82 a gallon.
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A big factor in the rise of diesel, which is derived from oil, is global strain on refining capacity. Attacks by Ukraine on Russian refineries have forced one of the world’s biggest refiners to suspend diesel exports. The shipping snarls in the Strait of Hormuz have also reduced the world’s supply of diesel.
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Diesel powers a vast chunk of the global economy. In the United States, it fuels an array of critical infrastructure like farm equipment, trains and trucks. In emerging nations like Bangladesh it is used by farmers to power irrigation. As prices climb, businesses often must pass on the higher costs onto their customers.
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U.S. gasoline prices also rose on Thursday, jumping to a national average of $4.14 a gallon, AAA said. The increase has raised the cost for drivers by 39 percent since the war began.
Stocks are steady.
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Futures on the S&P 500 pointed to little change when stocks resume trading in the United States on Thursday.
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In Europe, the Stoxx 600, a broad-index that tracks the region’s largest companies, was up 0.25 percent. Stocks in Asia were mixed.
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