Key Takeaways
U.S. diesel prices are approaching $6 a gallon—over 55% higher than at the start of the conflict with Iran.
Since the Iran conflict started, the price of very low sulfur fuel oil is up 76% at just under $825 a metric ton, or $130 a barrel—a higher increase than the 40% rise in Brent crude oil.
Between Ukrainian attacks on Russian refineries, refinery closures, and the ongoing troubles in the Strait of Hormuz, refined product supply for distillates lags demand, driving prices higher.
Diesel powers freight and deliveries and runs farm equipment, so higher diesel prices raise transportation costs for goods and food, especially produce, meat, and other perishables that need frequent restocking.
Brent oil reached $100 a barrel as hostilities in the Middle East increased.
The U.S. struck five Iranian oil tankers on September 8 in retaliation for attempted strikes on a U.S. Navy warship, and Iran retaliated by launching missiles at Jordan and firing on two Navy destroyers.
The New York Times reports Iran is using escalation as a tool to impact U.S. midterm elections, in part because the U.S. blockade on Iranian ports and U.S. sanctions are hurting its economy.
Brent crude oil, the international benchmark, traded at $100.86 on September 9 as traders worried the war in the Middle East was intensifying. The United States hit five Iranian oil tankers on September 8, and Iran retaliated by launching missiles at Jordan and firing on two Navy destroyers. China’s latest oil purchases also helped raise market prices. China imported 8.93 million barrels per day of crude oil in August, up 6.2% from July, recovering from its decade-low in June of just 7.1 million barrels per day. August imports were still 23.4% lower than in the same month last year.
Since the Iran conflict began on February 28, Brent oil has risen as high as $126.41 a barrel, a peak reached on April 30. Recent attacks by Iran-backed Houthis on Saudi energy facilities have set oil installations ablaze, threatening an expansion of the conflict. Saudi Arabia said it would retaliate against the Houthis after attacks that had injured 73 civilians. The attacks threaten oil shipments via the Red Sea, an alternative route to the Strait of Hormuz, where oil flows have been reduced.
China amassed a huge strategic oil reserve of 1.4 million barrels, buying sanctioned oil from Russia, Iran and Venezuela at a discount, allowing it to cut oil imports during the Iran conflict. China began increasing its oil imports in July as oil traffic from the Middle East picked up, and Chinese refiners bought from Russia and other suppliers such as Argentina. Refiners were restocking as China eased restrictions on petroleum exports, which were banned for several months early in the conflict with Iran. Chinese refined oil product exports increased by 29% from July to August, topping fuel exports in August 2025.
Fuel oil and diesel prices are at record highs as Ukrainian attacks have damaged Russian refineries, Iranian attacks have damaged Middle East refineries, and flows out of the Strait of Hormuz are limited for fear of attack from Iran’s military. Globally, refinery output is stretched thin as closures in North America and Europe have reduced any excess capacity. While China has been building refineries, it banned petroleum product exports during most of the Iran conflict to limit use of its 1.4 billion-barrel oil reserve, which it accumulated by buying sanctioned oil at a discount from Iran, Venezuela, and Russia.
Global refinery disruptions have reduced crude oil processing by about 5 million barrels per day from a year ago, or nearly 10%, tightening diesel supplies across major markets. Outages and export constraints in the Middle East, Russia and China are negatively affecting diesel demand, which has been relatively unchanged, intensifying the pressure on prices as supplies contract. Around 900,000 barrels per day of diesel ​moved through the Gulf before the conflict with Iran started, equivalent to about 10% of global seaborne supply. Ukrainian drone attacks on Russian oil refineries have led Moscow to ban diesel exports through September 30 to support domestic supplies.
The limits on diesel supply pushed the U.S. average diesel price to $5.90 per gallon — a record high and up more than 55% since the Iran conflict started — despite domestic refineries running at a 97% utilization rate and producing a record amount of diesel in July. That surpassed the previous peak price, set four years ago due to Russia’s invasion of Ukraine. President Trump wants U.S. refiners to increase gasoline and diesel output by building more refineries, but companies are instead focused on expanding and upgrading existing facilities because of the economics.
Fuel oil stocks are about 30% ​below three-year seasonal averages in top ​hubs Singapore, Amsterdam-Rotterdam-Antwerp and Fujairah. Demand for fuel oil has also increased as ships have had to sail longer routes to avoid the Bab el-Mandeb strait because of threats from Houthi militants. Since the Iran conflict started, the price of very low sulfur fuel oil is up 76% to just under $825 a metric ton, or $130 a barrel—a larger increase than the 40% rise in Brent crude oil.
With Ukrainian drones damaging Russia’s refineries, its August fuel oil exports fell to a record low of 591,000 barrels per day, down from an average of over 860,000 barrels per day in 2025—a 31% decline. Middle East fuel oil exports fell 45% year on year to an average of 447,000 barrels per day from March to August. Refinery outages in the Middle East have included the Al-Zour refinery in Kuwait, which has exported only one 26,000-barrel-per-day cargo since March, versus around 191,000 barrels per day in January to February.
Conclusion
Refiners, increasingly affected by wars and conflicts that have disrupted both crude oil processing and tanker traffic, are ‌prioritizing diesel and other products ahead of fuel oil, which is needed to power ships and electrical plants. However, both fuel oil and diesel prices are at record highs. Since the Iran conflict started, the price of very low sulfur fuel oil is up 76% to just under $825 a metric ton, or $130 a barrel—a higher increase than the 40% rise in Brent crude oil. U.S. diesel prices are approaching $6 a gallon—over 55% higher than at the start of the conflict with Iran. Brent oil prices have hit $100 a barrel again as the conflict with Iran continues.
The United States struck five Iranian oil tankers on September 8, and Iran retaliated by launching missiles at Jordan and firing on two Navy destroyers. China is slowly upping its oil imports as it resumes petroleum exports it had banned early in the conflict. Iran is hurting economically from U.S. sanctions and the blockade of its ports, and while U.S. naval escorts have allowed some oil to transit the Strait of Hormuz, global crude stockpiles have yet to be replenished, and natural gas and other oil derivatives are not getting through, which will continue to hurt the global economy.
