Diesel prices are hitting record levels as conflict in the Middle East intensifies, pressuring Republican campaigns and spurring proposals that economists say could backfire on consumers.
Republicans in key battlegrounds including Iowa and Michigan are urging an end to exports of U.S.-refined diesel to boost domestic supplies. Former President Donald Trump signaled support, but the administration’s energy chief said Wednesday a full ban is not on the table. The United States has used 4.1 million barrels of diesel per day this year and exported 1.5 million barrels daily so far, according to S&P Global Energy.
The impact is immediate for anyone fueling diesel vehicles or running generators. AAA reported an average of $6.52 per gallon on Wednesday, up 73% from $3.77 just before the war with Iran began.
Higher diesel prices are expected to ripple through the economy, potentially reshaping the political landscape as Democrats look to channel frustration over rising costs and an unpopular overseas conflict.
“The price of diesel touches everything in our economy that needs to move,” said Joseph Brusuelas, chief economist at RSM. “That includes the thing we buy the most of, groceries.”
While regular gasoline typically draws more attention, diesel has quickly become a flashpoint on the trail. In Kansas, Democratic Senate hopeful Adam Hamilton told supporters that farmers fear it is getting harder to stay afloat. “A war has sent up the price of diesel,” he said. “These guys said, ‘We don’t know if we’re going to keep the farm.’”
In Virginia, Democrat Elaine Luria, running for a Hampton Roads-area House seat, cited high diesel costs during a Virginia Beach roundtable. She linked the surge to escalating regional tensions, noting Iran’s proxies such as the Houthis are expanding their footprint and warning the conflict is morphing into an economic crisis. Luria is seeking to reclaim her seat from Republican Rep. Jen Kiggans.
Republicans including Rep. Ashley Hinton, now running for Senate in Iowa, are pushing to end the war and halt diesel exports immediately, arguing the move could bring relief at the pump and at grocery checkouts. “Iowans are being squeezed,” Hinton said. “We need to use every option at our disposal to provide some relief from high prices.”
The idea has divided the GOP. Senate Minority Leader John Thune said he is open to considering a ban, while Sen. Chuck Grassley of Iowa has become one of its loudest advocates, brushing aside criticism from colleagues representing fuel-producing states. “IF U CAN EMBARGO CHIPS U CAN EMBARGO DIESEL,” Grassley posted on social media.
Trump told reporters Tuesday, “I’ve called for that too.” Treasury Secretary Scott Bessent said officials are weighing options to bring diesel prices down. Energy Secretary Chris Wright said Wednesday that “nobody wants a full blanket ban of zero exports of diesel,” indicating wider restrictions are not being seriously considered.
Why diesel prices are soaring
Several factors are converging to push diesel higher. The Middle East supplies a large share of the crude used to make diesel, so prices have climbed faster than gasoline since the conflict began in February. The temporary closure of the Strait of Hormuz removed about 20% of global oil from the market, lifting prices for diesel, gasoline and jet fuel.
Some supplies have returned, but volumes remain well below prewar levels, said Debnil Chowdhury of S&P Global Energy. On top of that, Ukrainian strikes on Russian refineries removed an estimated 800,000 to 1 million barrels per day of diesel from global markets, S&P said.
“If there is a way to a peace deal or a peace agreement announcing that there will be no more attacks on Russian refineries, on Middle Eastern refineries, that would obviously make the largest impact on the underlying price,” Chowdhury said.
The speed of the recent surge is straining businesses. “Diesel went from under $6 per gallon to over $6.53 in the last two weeks,” said William Stern, CEO of Cardiff, a San Diego small business lender that has seen loan requests spike. “You tell me what business, small or even large, budgeted for that.”
Economists warn export ban could raise diesel prices
An export ban could have the opposite effect from what supporters intend. The American Petroleum Institute and several economists cautioned that most Americans would likely pay more if exports stop.
“That will result in Americans taking a one-two punch for food and fuel prices that just don’t stop,” Brusuelas said.
Analysts warn that if U.S. refineries stop exporting diesel, inventories would swell and storage would fill. Refiners would then need to curb diesel output, but they cannot easily reduce diesel production without also cutting gasoline and jet fuel, which would push those prices higher.
“There really is no easy way to repair the kind of damage it would be to the global diesel supply chain,” Chowdhury said. “It really will have this effect across the entire global economy.” He added that the odds of a global recession would rise significantly.
Energy economist Phil Verleger, who advised the federal government during the 1970s oil crisis, said a diesel export ban could bring prices down but at a steep long-term cost. He warned it could undermine confidence in the U.S. as a reliable supplier, echoing the fallout from President Richard Nixon’s 1973 soybean export ban that pushed global buyers toward Brazil.
“It’s terrible economics, the long-term consequences will be horrible,” said Verleger, who has Iowa farming roots. “If I were an elected politician, I’d do it.”
As the political season heats up, diesel prices remain a potent issue for haulers, farmers and families who will feel the impact through higher transportation and grocery costs, including here in Hawaiʻi where shipped goods depend on fuel markets far beyond the islands.
The conflict’s economic and political fallout echoes broader debates over foreign policy and U.S. leadership that have surfaced in recent UN General Assembly speech coverage. At the same time, agencies such as the U.S. Energy Information Administration continue to monitor fuel markets for additional shocks.
