The overlooked Russia-Ukraine war grows its outsized impact on energy as U.S. diesel prices hit all-time high | Fortune
The ongoing conflict in Ukraine has significantly impacted the global energy landscape, particularly in the realm of diesel fuel. Ukraine's successful drone strikes on Russia's refining network have resulted in an estimated 40% of Russia's oil‑refining infrastructure being offline. In addition, Russia has halted diesel exports, effectively removing about 3% of daily global diesel supplies from the market.
Global Diesel Supplies Dwindle
The situation has been worsened by refining outages in the Middle East and by China’s decision to mothball several facilities as its oil imports fell. Consequently, the average price of diesel in the United States climbed to a record $5.85 per gallon, according to GasBuddy. At the same time, the average U.S. gasoline price rose to $4.14 per gallon, the highest level ever recorded as the Labor Day weekend began, surpassing the previous 2012 high.
Refining Constraints Fuel Price Hikes
Matt Reed, president of the geopolitical and energy consultancy Foreign Reports, described the circumstances as “critical,” noting that constraints in refining are a key driver of elevated fuel prices. Reed observed that while the global oil market has shown surprising resilience, the refining ecosystem remains extremely fragile. He pointed out that the United States has drawn down its Strategic Petroleum Reserve of crude oil to levels not seen in 44 years to keep crude flowing, yet there is no comparable strategic reserve for refined fuels.
Economic Impact of Diesel Prices
Record diesel costs are reverberating through the broader economy, especially via inflation. The farming and trucking sectors, which depend heavily on diesel, are facing higher operating costs that are being passed on to consumers. Patrick De Haan, head of petroleum analysis at GasBuddy, emphasized that diesel powers the economy and that record‑high prices affect more than just transportation. Elevated diesel prices raise supply‑chain expenses, which in turn lift the cost of groceries, household goods and a wide range of everyday products.
Global Refining Capacity Offline
Outages across Russia, the Middle East and China now account for more than 10% of worldwide oil‑refining capacity being offline. North American refineries have partially offset the shortfall by running at maximum capacity, but many plan maintenance shutdowns in September and October that will trim output. Some facilities, including Canada’s largest refinery near Maine and several U.S. Gulf Coast plants, will operate at reduced levels, deepening the diesel shortage.
Pressure on Product Prices
Gregory Brew, senior energy analyst with the Eurasia Group, warned that the diesel shortage is unlikely to improve soon. He said the reduced refinery runs will put additional upward pressure on U.S. product prices beginning in mid‑September and lasting through November. Russia’s decision in July to stop diesel exports, a ban now extended through September and possibly longer, has added to global price spikes. To make up for domestic shortfalls, Russia is refining more oil in Kazakhstan and increasing gasoline imports, further tightening global supplies.
Ukraine’s Drone Strikes Impact
Ukraine’s increasingly precise and longer‑range drone attacks on Russian energy assets have reshaped the market dynamics. When Russia first invaded Ukraine in 2022, oil and fuel prices surged worldwide amid fears of a broader conflict, but they later stabilized as the war appeared contained. The current environment reflects a shift in strategy, with Ukraine’s expanded drone campaign playing a central role in the ongoing pressure on global energy markets.
Source: fortune.com · 2026-09-05