The escalating conflict in the Middle East is driving diesel futures prices sharply upward, with the retail market already experiencing significant price hikes. The Department of Energy/Energy Information Administration's average weekly retail diesel price, a key benchmark for fuel surcharges, increased by 8.8 cents per gallon to $3.897, effective Monday and published Tuesday. This marks the highest price since July 8, 2024, when it stood at $3.865 per gallon. This price has now climbed for seven consecutive weeks, adding a total of 43.8 cents per gallon to the benchmark.

However, the latest retail price increase likely reflects earlier gains in ultra-low sulfur diesel (ULSD) futures, given the typical lag between futures market movements and changes at the pump. The recent trading activity in futures markets over the past two days, coupled with observable increases at the pump, suggests further price hikes are imminent, particularly in anticipation of or reaction to the joint U.S.-Israel attack on Iran and Iran's subsequent retaliatory actions.