By Mia Gindis and Will Kubzansky
US diesel stockpiles are projected to fall this month to their lowest level in over two decades, according to a new government report, as wars around the world, including one launched by Washington, choke flows from key export hubs.
Inventories of the workhorse fuel are expected to dip below 100 million barrels for the first time since 2003, according to the Energy Information Administration’s Short-Term Energy Outlook released Wednesday.
The agency also hiked its retail diesel price forecast for the final quarter of 2026 by 14% to $5.55 a gallon, while boosting its wholesale price forecast by 33% from a month earlier.
The figures come after retail diesel prices hit a record last week and are trending toward $6 a gallon. Energy markets have been roiled by the Russia-Ukraine conflict and the US war on Iran. Central banks, including the Federal Reserve, are weighing higher interest rates to try to contain spiking inflation while surging energy costs are squeezing consumers, posing a political challenge for the White House and Republican-led Congress ahead of November’s midterm elections.
Low inventories may also contribute to higher prices for residential heating oil in the Northeastern United States, the EIA said. Inventories are tightening further just as peak demand for diesel nears, with heating season and harvest time in the Northern Hemisphere coinciding with planting season in the Southern Hemisphere.
The agency expects diesel crack spreads, the gap between prices of finished fuels and unprocessed crude, to remain over $2 a gallon — or $84 a barrel — through November, before declining through mid-2027. The esoteric gauge topped $100 for the first time last month and has continued to notch new highs, while increasingly being cited by central bankers as a measure of inflationary pressure.