Diesel Price Drop: Why Oil Markets Are Tumbling

Diesel prices are taking a dive, but don’t get too comfortable. John Kingston breaks down the volatile oil market, highlighting massive price swings and the geopolitical chess game influencing global supply. From the Strait of Hormuz to damaged refining capacity, the factors keeping oil markets on edge are complex. Understand why analysts are divided on the market’s future and what it means for your supply chain.

The Department of Energy’s Energy Information Administration average diesel price — the basis for most fuel surcharges — fell 16.5 cents to $6.127 per gallon, as oil futures markets continued a sharp post-election decline driven by expectations of reduced military escalation in Iran.

The drop is part of a broader pattern of extreme volatility. Of the 36 diesel prices posted since military action in Iran began, 21 have been double-digit moves — up or down — according to John Kingston, who covers energy markets for FreightWaves. Ultra-low sulfur diesel on the CME settled at roughly $4.42 on November 1st, fell to $4.21 the day before the interview, and was down again by double digits on the day of the broadcast.

“The anticipation is that as a result of the election, the Democrats certainly don’t have any taste for ramping things up in Iran,” Kingston said. Markets had priced in a possible post-election ramp-up in military activity — that escalation did not materialize, and traders are now pricing in at least a period of stability, if not formal resolution.

This story was originally published by FreightWaves. Read the full story at FreightWaves →