Iran war pushes diesel – the economy’s lifeblood – to record high prices, with no relief on the horizon

Diesel hit a record national average of $6.28 a gallon on Sept. 14, 2026, up 78% since the U.S. war against Iran began in February and 67% year over year.

Analysts point to three compounding causes: decades-old low-sulfur refining rules that raised costs and cut capacity, Russia's export ban amid its war with Ukraine, and the closure of the Strait of Hormuz for over six months. Only one new refinery has been built in 50 years, and refiners are running at nearly 98% capacity while still producing less diesel than in 2025.

Refinery profit margins on diesel, called crack spreads, topped $100 a barrel for the first time ever in late August, even as a Joint Economic Committee analysis found the price spike added $1.4 billion to crop-planting costs in 2026. Sen. John Thune has proposed banning U.S. diesel exports, while EIA projects inventories will stay historically low into 2027, threatening winter heating oil supplies in the Northeast.

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