U.S. diesel inventories are at the lowest seasonal level since the 1980s while the market heads into its seasonal demand peak (late-summer/autumn farm harvest then winter heating), leaving the diesel complex highly sensitive to supply shocks. On-highway diesel average retail price on Aug. 24 was about $5.65/gal, roughly $1.94/gal higher YoY (+>50%) and near 2022 highs, indicating tight stocks are already feeding into end-user prices. U.S. refineries are running near capacity even as inventories

U.S. diesel inventories are at the lowest seasonal level since the 1980s while the market heads into its seasonal demand peak (late-summer/autumn farm harvest then winter heating), leaving the diesel complex highly sensitive to supply shocks. On-highway diesel average retail price on Aug. 24 was about $5.65/gal, roughly $1.94/gal higher YoY (+>50%) and near 2022 highs, indicating tight stocks are already feeding into end-user prices. U.S. refineries are running near capacity even as inventories sit at multi-decade lows, and global supply risks — Middle East refinery damage, attacks on Russian refineries, and Strait of Hormuz shipping disruptions — are compounding the squeeze. Market implications include upside risk to diesel and crude prices, positive sensitivity for refining equities, potential pass-through to U.S. inflation and attendant implications for Fed policy.