The benchmark retail diesel price in the United States fell below $5 per gallon for the first time since early March, according to data released Tuesday by the Department of Energy and Energy Information Administration. The latest price stands at $4.832 per gallon, down 22.7 cents from the previous week, as oil markets continue their sharp decline following the gradual reopening of the Strait of Hormuz after months of military conflict. The drop marks the eighth consecutive weekly decline and the seventh straight week of falling prices since the Iran war disrupted global oil flows.
The DOE/EIA price, which serves as the basis for most fuel surcharges, has fallen 80.8 cents per gallon over the seven-week decline period. Despite the recent slide, diesel remains about 94 cents per gallon higher than pre-war levels. Futures prices have dropped even faster, with ultra low sulfur diesel settling at $3.0931 per gallon on Monday, down nearly 52 cents since its recent peak of $3.6126 per gallon on June 10. The highest settlement during the military action was $4.6084 per gallon on March 20. As of Tuesday morning, ULSD futures had dropped an additional 4 cents to $3.0530 per gallon.
The report notes that markets haven't been swayed by ongoing uncertainty about the peace deal, with prices continuing their downward trend even after weekend news suggested the Strait of Hormuz reopening might face setbacks. According to the article, "after a brief surge when futures trading began Sunday night U.S. time, ULSD and the entire oil complex went back to lower numbers." Bloomberg reported Monday that Iranian crude has been "flooding on to the global market again" following the end of the U.S. blockade, with more than 30 million barrels departing for Asia in the past week. Bank of America Merrill Lynch recently reduced its forecast for Brent crude from $93 per barrel to $82 per barrel, reflecting the changed market outlook.
The steep price drops come despite what the Bank of America report calls "the largest supply disruption on record", exceeding the 1979 Iranian Revolution and the 1991 Gulf War. Production losses averaged 11 to 14 million barrels per day during the conflict, with volumes lost over 100-plus days topping 1.3 billion barrels. The report warns that clearing mines and restoring normal flows will likely take months, meaning oil markets could remain in deficit until the fourth quarter of 2026. Still, analysts expect the supply surplus that was forecast before the war to reemerge next year at about 1 million barrels per day, which should keep prices relatively low.
The path forward remains uncertain, with the road to normalcy likely to be volatile. While Iranian exports have surged in the immediate aftermath of the blockade's end, Bloomberg notes that "the export rate will drop again" because the current gush mostly reflects a clear-out of blockaded cargoes. Bank of America projects that even with restocking needs and a tighter 2027 market, Brent will average around $70 per barrel "if the peace holds." For trucking companies and shippers who've weathered months of elevated fuel costs, the steady decline offers relief—but the historical scale of the disruption means the market's stability hangs on a fragile peace.