This is an updated version of an article that appeared in the Sept. 26 Pro Farmer weekly newsletter.
Diesel prices are at a record because the world’s refineries cannot produce enough of it. Crude is part of the story, but the larger part is missing product. And it’s putting a squeeze on farmers in more ways than one.
Prices at a glance
EIA’s weekly on-highway diesel—the print most fuel surcharges track—was $6.529 a gallon for the week of Sept. 21, up 24¢ from the week before and $2.78 from $3.749 a year earlier. AAA’s year-ago diesel average was $3.693, a 77% jump. Regular gasoline rose about 41% over the same stretch.
That climb did not start last week. February 2026, the last full month before the Iran war, averaged about $3.72 diesel. EIA’s last pre-war weekly number was $3.711. From there to $6.53 is nearly $2.80 a gallon.
Two wars, one fuel
The shortage itself is the result of two wars.
The U.S.–Israel conflict with Iran began in late February and has restricted tanker traffic through the Strait of Hormuz for more than six months. Some analyses put lost crude and product shipments as high as a fifth of global supply. Gulf refineries that had been covering Europe after Russia faded saw diesel and gasoil exports fall to about a quarter of pre-war levels. Attacks on facilities, including Saudi infrastructure, cut even more.
Ukrainian drone strikes took a large share of Russian refining offline—one estimate cited about 40% of capacity. As a result, once a top diesel exporter, Moscow banned diesel shipments in July and has kept the ban in place. By late summer, product exports were near a halt.
Why U.S. tanks stayed tight
Those shocks hit a system that already had almost no spare capacity. U.S. refineries have been running at 97–98% utilization, while some yield has shifted toward higher-margin jet fuel. Distillate stocks remain well below the five-year seasonal average. Demand does not give way quickly with several industries heavily reliant on diesel.
The United States still produces more diesel than it burns. Refiners have sent the surplus abroad—recently 1.5 to 1.8 million barrels a day, about a fifth of seaborne trade—to Mexico, Brazil and Europe. Those cargoes filled holes overseas and kept tanks tight at home. That is how a global product shortage became a U.S. inventory problem, and it helps explain why rising fuel prices don’t move in lockstep with crude.
The crack, not just the barrel
A crack spread, or refinery margin, is wholesale diesel minus the crude used to make it. U.S. Gulf Coast diesel cracks crossed $100 a barrel in late August and early September, about five times the pre-war level near $20. Kansas State agricultural economist Greg Ibendahl splits the pump price into three pieces: crude (Brent divided by 42 gallons), the refining margin (Gulf Coast wholesale ultralow sulfur diesel minus that crude cost), with taxes, distribution and retail including about 60 cents of fuel tax. A $1 move in crude adds only about 2.38¢ a gallon of feedstock cost. Of a $2.25 rise from February to early September, Ibendahl put about 68¢ on crude and $1.71 on the margin.
The EIA expects U.S. diesel cracks to stay above $2 a gallon through November and then ease through mid-2027—if tanker traffic through Hormuz returns and Saudi and Kuwaiti distillate exports recover. If the strait and Russian plants stay impaired, the cracks stay wide. The missing barrels are the refined product. That is also why Washington’s first political instinct, keeping those barrels home, does not fix the constraint that created the margin.
What an export ban would do
The White House has prepared a possible 90-day diesel export ban. President Trump has backed the idea, while Energy Secretary Chris Wright has said a blunt ban “definitely doesn’t work.”
A ban would not add capacity. It would close the outlet that lets Gulf plants run full tilt. Inland prices could dip for a few weeks, but Europe and Latin America would tighten further and once tanks fill, refiners cut crude runs—and therefore gasoline and jet fuel.
There are three things that could bring relief: Russian runs recover, Hormuz product flows recover or demand is destroyed. U.S. plants cannot add meaningful capacity in 90 days and if both disruptions persist, retail diesel prices are set to remain elevated into 2027.
Basis: the second hit for farmers
At the day’s end, high diesel prices hit the farm twice. Combines and grain trucks cost more to run, and elevators often bid a weaker basis because outbound truck, rail and barge fuel is higher. When freight costs rise and the destination price does not, the origin bid falls. Harvest already weakens basis as grain arrives faster than it can leave. Record fuel costs add more pressure.
The double hit adds up fast. On a 1,000-bushel load, a 10-cent weaker basis is $100 off the check; $2 more diesel on the tractor and the grain truck is another bill on top of that.
Until product supply recovers, diesel is a harvest-cost and grain-freight problem. Crude is only the first line on the invoice.
