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(Bloomberg) — The cost of diesel in the US fell below $5 a gallon for the first time since mid-March, offering some relief for one of the global economy’s most important fuels.
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The national average retail price declined to $4.98 a gallon on Wednesday, according to the American Automobile Association. That’s down from a peak of $5.69 a gallon in April, though still well above the $3.76 a gallon recorded on the eve of the US-Iran war.
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Diesel prices surged at the outset of the conflict, partly because the Strait of Hormuz is a critical transit route for fuel produced at refineries across the Gulf region. The increase raised costs for businesses and consumers worldwide, who rely on diesel for freight transportation, power generation and heating.
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More recently, crude prices have retreated sharply from their wartime highs, pulling diesel lower as well. The decline has been driven by increased tanker traffic through Hormuz, temporary sanctions relief for Iranian oil and progress in US-Iran peace talks.
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The White House has deployed a range of measures to contain energy costs, including waiving the Jones Act and drawing down the Strategic Petroleum Reserve. Even so, the market has remained tight. The US has increasingly acted as the supplier of last resort to global oil markets, helping to push domestic diesel inventories to their lowest seasonal levels in decades.
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There may yet be more upward pressure on diesel prices if Russia, typically a major exporter, decides to implement a ban on sending diesel out of the country.
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US President Donald Trump has also ordered the Department of Justice to look into gasoline prices, which he says aren’t falling fast enough.
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