--- title: "Russia-Ukraine Conflict + Strait of Hormuz Disruptions: California Diesel Prices Break $7 Again" type: "News" locale: "en" url: "https://longbridge.com/en/news/296457419.md" description: "Multiple conflicts have disrupted 8% of global diesel supply, sending California prices soaring to $7. The crisis is acting as an \"inflation assassin,\" directly impacting consumers and driving up overall prices. While refiners reap huge profits from hundred-dollar margins, sanctions hinder capacity repairs, suggesting the nightmare of high global diesel prices may not end in the short term" datetime: "2026-08-20T08:27:38.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296457419.md) - [en](https://longbridge.com/en/news/296457419.md) - [zh-HK](https://longbridge.com/zh-HK/news/296457419.md) --- # Russia-Ukraine Conflict + Strait of Hormuz Disruptions: California Diesel Prices Break $7 Again Global refining capacity has been hit by multiple conflicts, with the diesel supply crisis now transmitting to the consumer end. **California diesel prices touched $7 per gallon again on Wednesday, up about 30 cents from a month ago and surging approximately 37% year-over-year, or $1.89 more per gallon.** Meanwhile, the national average diesel price in the U.S. was reported at $5.50 per gallon on Wednesday, rising about 40 cents within the month and standing $1.81 higher than the same period last year. The supply shock is spreading to broader sectors of the economy. Kevin Book, Managing Director at ClearView Energy Partners, stated in an interview with CNBC on Monday that rising diesel prices have been passed on to consumers through grocery bills and other goods, calling it "a fairly severe inflation concern." ## Supply Gap: Conflicts Compound, Disrupting About 8% of Global Diesel Supply Andy Lipow, President of Lipow Oil Associates, stated that the conflicts in Ukraine and Iran have collectively disrupted about 8% of global diesel supply—a significant gap based on global daily demand of 28 million barrels. Specifically, drone attacks by Ukraine on Russian refineries have forced Moscow to ban approximately 800,000 barrels per day of diesel exports. Disruptions in the Strait of Hormuz have affected about 1.2 million barrels per day of diesel exports from the Middle East. Additionally, allies of Iran's Houthi forces recently attacked Saudi Arabia's Jizan refinery on the Red Sea coast, causing the facility and its daily capacity of 200,000 barrels to remain shut down until at least the end of August. Meanwhile, Asian refiners have reduced crude oil processing volumes, leading to a decrease in fuel exports. Dan Yergin, Vice Chairman at S&P Global, estimated in a July 31 interview with CNBC that about 6 million barrels per day of global refining capacity is currently offline. "This is affecting the entire economy," Yergin said. ## Price Trends: Rising Again After Falling from Peaks, Aggravated by Holiday Demand Season California diesel prices have experienced significant volatility this year. In April, as Iran tightened restrictions on tanker traffic in the Strait of Hormuz, California diesel prices hit a record high of $7.75 per gallon. Later, as Washington and Tehran signed a memorandum of understanding and exports through the Strait of Hormuz recovered somewhat, prices fell below $6.50 per gallon in July. However, prices are rising again just before the agricultural harvest season and amid renewed freight demand for the holiday shopping season, a particularly unfavorable timing. Bob McNally, President of Rapidan Energy, emphasized in an interview with CNBC that diesel is the most important fuel for the global economy, widely used in transportation, heating, agriculture, and industry, making it "the macro fuel to watch." ## Refiner Profits: Refining Margin Breaks $100 Per Barrel Amid tight supply, refiners are enjoying substantial profits. The refining margin for processing crude oil into diesel has surged to $100 per barrel, higher than the current trading price of U.S. crude oil at around $85 per barrel. Lipow pointed out that diesel prices in California are higher than in other parts of the mainland U.S., partly because the state relies more heavily on imported crude oil, which is costlier, and requires special formulation diesel. Additionally, environmental regulations as well as state excise and sales taxes further push up local fuel costs. Kevin Book stated that diesel prices are unlikely to fall significantly until damaged refineries in Russia resume operations and Middle Eastern exports increase again. However, international sanctions will make it difficult for Moscow to procure materials needed to repair refining facilities, "which will prolong the downtime," he said. This means that before there is a substantive easing of geopolitical tensions, supply pressures in the global diesel market may persist, continuing to transmit to consumer goods prices through transportation and logistics costs. ### Related Stocks - [SCO.US](https://longbridge.com/en/quote/SCO.US.md) - [USO.US](https://longbridge.com/en/quote/USO.US.md) - [UCO.US](https://longbridge.com/en/quote/UCO.US.md) - [BNO.US](https://longbridge.com/en/quote/BNO.US.md) - [03097.HK](https://longbridge.com/en/quote/03097.HK.md) - [03175.HK](https://longbridge.com/en/quote/03175.HK.md) - [SPGI.US](https://longbridge.com/en/quote/SPGI.US.md) ## Related News & Research - [The Iran War Sent Gas Prices Skyrocketing, but the US Now Faces a Diesel Problem](https://longbridge.com/en/news/296343018.md) - [Asia Fuel Oil-Premiums extend climb on supported buying interest](https://longbridge.com/en/news/296212198.md) - [Singapore oil product inventories ease to two-month lows](https://longbridge.com/en/news/296459963.md) - [Oil edges up on uncertainty over exports through Hormuz](https://longbridge.com/en/news/296282399.md) - [Oil extends climb on prolonged Hormuz export uncertainty](https://longbridge.com/en/news/296302371.md)