U.S. Diesel Falls Below $5 a Gallon for First Time Since March

The price of diesel fuel in the United States has fallen below $5 a gallon for the first time since mid-March, offering some relief to the market for one of the key fuels of the global economy.

According to the American Automobile Association, the average retail price of diesel in the country fell on Wednesday to $4.98 a gallon. That is below April’s peak of $5.69, but still significantly above the $3.76 a gallon recorded on the eve of the war between the United States and Iran.

Diesel prices rose sharply at the start of the conflict, in part because the Strait of Hormuz is a crucial route for supplies of fuel produced at refineries in the Gulf states. The increase in prices raised costs for businesses and consumers around the world: diesel is used in freight transport, power generation and heating.

In recent weeks, oil prices have fallen noticeably from wartime highs, pulling diesel prices down as well. This was helped by increased tanker traffic through the Strait of Hormuz, a temporary easing of sanctions on Iranian oil and progress in talks between the United States and Iran.

The White House has used a range of measures to contain energy costs, including a temporary waiver from the requirements of the Jones Act and sales of oil from the Strategic Petroleum Reserve. Even so, the market remains tight. The United States is increasingly acting as a supplier of last resort for the global oil market, causing domestic diesel inventories to fall to their lowest seasonal levels in decades.

Additional pressure on prices could emerge if Russia, normally one of the major exporters of diesel, decides to impose a ban on shipments abroad.

U.S. President Donald Trump has also instructed the Justice Department to examine gasoline prices, which he says are not falling quickly enough.