As the second quarter progresses, energy markets are adjusting to a prolonged disruption across the Middle East rather than a short-term shock. One prevailing operational assumption is that the Strait of Hormuz will remain effectively closed, tightening global energy supply and extending the disruption far beyond the immediate headlines.
Even if oil and diesel flows resume, maritime routes supplying refineries would require weeks to stabilize, marine insurance costs would likely remain elevated, and import dependencies would once again become a major factor. Diesel continues to serve as the primary fuel source for global road freight transportation, and increasing volatility in its availability is emerging as a critical strategic risk to monitor.
Regional Diesel Trends
In North America, U.S. diesel inventories remain below seasonal norms, although they have not yet reached crisis thresholds. However, prices have risen sharply, and carriers are experiencing increasing pressure as fuel surcharges climb alongside the rapid rise in diesel costs. While fuel expenses are often treated as pass-through costs, timing gaps, imbalanced freight lanes, and higher deadhead mileage continue to compress carrier margins.
Export demand is also becoming increasingly important. As international markets tighten, U.S. and Canadian barrels are becoming more attractive, subtly pulling supply outward. U.S. distillate exports recently reached a multi-year high as shipments to Europe increased. Supply remains available for now, but global demand dynamics are exerting growing influence over North American balances.
Mexico sits at the opposite end of the spectrum. Its heavy reliance on imports and limited refining flexibility are causing diesel availability to tighten much sooner. Canada broadly mirrors the situation in the United States, although Eastern Canada remains more exposed due to its greater dependence on imported supply.
The European diesel market is far less forgiving. Refineries are operating at near-full capacity to meet essential diesel and jet fuel demand. Although alternative fuels are more widely used than in North America, Europe’s freight fleet still relies overwhelmingly on diesel, and with limited inventory reserves, the region experiences disruption almost immediately whenever crude oil flows decline.
Jet fuel markets are already showing signs of critical pressure, while rising marine fuel costs and longer shipping routes continue to spread across global logistics networks. The broader trend points toward a material tightening of supply conditions, with elevated volatility becoming the defining characteristic of the quarter rather than a temporary spike.
Liquefied natural gas (LNG) and compressed natural gas (CNG) provide limited relief in parts of Asia and China, but long-haul freight transportation worldwide still depends heavily on diesel. Asia has already begun implementing conservation measures. China stands out because government control over refining campaigns, export quotas, and inventory allocation has kept domestic fuel availability relatively stable, allowing the country to absorb part of the disruption.
Broader Fuel Market Considerations
Under the assumption that the Strait of Hormuz remains closed, the broader outlook points toward fragmentation rather than normalization. Inventories are expected to tighten unevenly across regions as governments and refiners prioritize domestic supply and restrict exports.
Countries with stronger political control and more diversified fuel portfolios (such as China) are better positioned to absorb part of the impact. Regions that rely heavily on imports and maintain a higher dependence on diesel (such as Australia) face a far more operational challenge, where allocation priorities and supply management ultimately determine what moves — and at what cost.
Although electrification continues to advance, it remains largely irrelevant outside urban, port, and short-haul operations. Smart Freight Centre projections point to an important directional trend: electrified drivetrains and hydrogen pilot programs are emerging as complements to diesel engines — not yet as replacements.
Infrastructure development, manufacturing commitments, and regulatory pressure suggest that electrification will shape future resilience. However, today’s freight transportation networks still operate primarily on petroleum distillates.
What This Means for Carriers
Fuel volatility is no longer just an operational cost variable; it has become a strategic risk factor that directly influences capacity, pricing, and service reliability across regions and transportation modes. Stress-testing assumptions, understanding regional tightening patterns, and monitoring allocation signals are now just as critical as tracking overall price movements.
Efficiency improvements, fuel diversification, and emerging low-carbon solutions may not resolve the current disruption, but they are increasingly shaping how resilient tomorrow’s supply chains will become.
North American Fuel Trends
The national average diesel price per gallon in the United States rose to $5.50 in April, up from $4.92 in March. Beyond the month-over-month increase, the average price remains significantly higher than the $3.57 per gallon recorded in April 2025. Historically, diesel prices have only been higher during May and June of 2022.
Average Diesel Price per Gallon in the U.S.
The national average diesel price in Mexico, shown here in Mexican pesos per liter, has surged to approximately 28 pesos in recent weeks.
Average Diesel Price per Gallon in Mexico
The national average diesel price in Canada, shown here in Canadian cents per liter, has declined in recent weeks, although it remains historically elevated.
Average Diesel Price per Gallon in Canada
