Diesel Fuel Market
The U.S. is seeing higher diesel prices because the market is tight on both crude and refined diesel fuel, and that tightness is being amplified by global disruptions, refinery constraints, and seasonal demand. A national shortage is not the only concern; regional price spikes are likely wherever supply is harder to move, or local refining capacity is strained.
In Colorado, diesel fuel prices since the beginning of the Iran war have increased from about $3.75 per gallon to about $5.50 per gallon …. a 47% increase!
What Is Causing It
Diesel fuel prices are being pushed up by several forces at once. First, higher crude oil prices raise the cost of making diesel. Second, global diesel inventories remain tight, with analysts citing strong demand and a shortage of refining capacity, while recent Middle East conflict and shipping disruptions have made the market more sensitive to price shocks. Third, refinery maintenance, outages, and transportation bottlenecks can reduce available supply and force buyers to compete for barrels.
Regional Variability
Regional price differences are very likely. Fuel prices tend to be higher farther from supply sources, and that pipeline disruptions, refinery maintenance, and shutdowns can keep prices elevated in affected areas. That means the West Coast, Rocky Mountain region, New England, and other supply-constrained markets can see noticeably higher diesel prices than the Gulf Coast or other refining hubs. In other words, the national average may look manageable while some regions pay much more at the pump.
How High Could Prices Go?
Current forecasts do not suggest a big further increase from here. The US Energy Information Administration suggests that the heavy summer demand period will result in prices staying at or slightly above current levels ($5.49 / gallon). Later in the summer, prices are projected to decline 7% in the 3rd quarter ($5.10 / gallon) and 11% in the 4th quarter ($4.89 / gallon).
Keep in mind there are industry experts who agree that price COULD go much higher if the Strait of Hormuz remains closed for some time. Thus, we could see continued price volatility rather than a smooth decline.
⚠️ Warning — Prices Will Remain High for a Long Time
Many people fail to realize that oil production in the Middle East will not come back online immediately when the Strait of Hormuz is opened. Many oil wells have been shut down, and they are not turned back on like a light switch. Each well must be “reworked” which could take a couple of weeks. Thus, oil flows will take months to restore and over a year to reach full production.
Diesel Engine Oil Market
The U.S. is facing a motor oil supply squeeze. 15W-40 diesel engine oil specifically, has tight availability which will result in higher prices than a nationwide “runout” of every shelf. The biggest drivers are global base-oil disruptions, refinery bottlenecks, and the fact that refiners are prioritizing the highest-value fuels and products while the supply chain stays strained.
What Is Causing It
The main issue is not crude oil itself, but rather it is the specialized base oil used to blend finished lubricants. The base oil is refined and shipped from the Middle East. In addition to the Strait of Hormuz being closed, some refineries have also been damaged. Thus, major base oil supply streams have been cut off cut off.
Other factors are refinery and logistics inflexibility. While U.S. refineries can adjust their operations to produce more base oils, they will not do so until it is financially optimal to do so. Most US refineries are optimized to maximize gasoline, jet fuel, and diesel fuel production. The transition to produce more base oil will occur when prices go up.
We can expect US refineries to:
- Continue to run at max capacity
- They will shift to making base oil when the economy favors them.
- Refiners and blenders will use temporary formulation flexibility. Reports indicate that emergency provisional licensing and OEM-approved substitutions can let formulators use alternate base oils or slightly different viscosity grades without violating specifications.
Bear in mind, lubricant supply does not move instantly from one region to another, thus logistics complications will increase supply shortages in some areas.
The silver lining is that 15W-40 diesel oil is less exposed than the highly refined synthetic engine oil. That means the diesel side is not immune, but it is likely less vulnerable than the newest light-duty motor oil grades.
Will There Be Outages?
A full-scale market outage is not the most likely outcome. The better term is tight supply — meaning there may be regional shortfalls, slower replenishment, and higher prices rather than a complete disappearance of product everywhere. Thus, remote regions like Colorado may be more prone to supply issues. In practical terms, some distributors, fleets, and retailers may face allocation limits or longer lead times if they need the exact brand or spec they normally buy.
For trucking and equipment users, the likely impact diesel engine oils like 15w40 will likely continue to have price increases but the oil will be available.
What Would Stabilize Supplies
Stability will likely come from a mix of supply-side and policy actions. More production at domestic refineries and lubricant plants would help, but new capacity takes time to come online and may not be located near the markets that are most constrained. Better logistics also matter, because moving product to the Northeast, West Coast, and other isolated markets is often the bottleneck, not just making more of it.