Diesel outlook: why fuel surcharges will stay high into 2027
Diesel set a record above $6.50 a gallon in September and the supply deficit is expected to last into 2027. How diesel prices reach your freight bills, why policy fixes won't help soon, and how to manage surcharges.
Keep fuel separate from linehaul in 2027 awards and tie every surcharge to the weekly DOE/EIA diesel index.
◷ Before 2027 carrier awardsKey takeaways
- Diesel was up 77.8% on the year in producer prices through August and set an all-time retail record above $6.50 a gallon in September.
- Strait of Hormuz crossings are down more than 80% since the war began, and forecasters expect an oil market deficit into early 2027.
- October's Russian diesel deal and red-dye order are unlikely to lower what you pay in surcharges this quarter.
- Fuel is roughly a fifth of a truck's operating cost, so surcharges, not base rates, drive much of the change in freight bills.
- Our move: tie every fuel surcharge to the weekly DOE/EIA diesel index and audit carrier tables.
How diesel prices are set
The retail diesel price is built from four pieces: the cost of crude oil, the refining margin to turn it into diesel, distribution and retail costs, and taxes. Crude gets most of the attention, but this year the refining margin has done much of the work. Diesel is a “middle distillate,” competing for refinery output with jet fuel and heating oil, so when refineries are damaged or shipping routes close, diesel tightens faster than crude.
For procurement teams, diesel matters twice. It is a direct purchase for fleets and equipment, and it is embedded in almost every freight bill through fuel surcharges. Using ATRI’s 2025 cost data, fuel is roughly a fifth of a truck’s operating cost, by our calculation.
What is driving prices now
The war with Iran. Ship crossings through the Strait of Hormuz, which normally carries about 20% of global seaborne oil and LNG, are down more than 80% since Feb. 28, according to S&P Global. Mediterranean diesel cargoes were about 70% above their pre-war level in late August, and European diesel refining margins are the highest in at least 15 years.
Russia. Drone strikes have taken roughly half of Russia’s refining capacity offline, according to S&P Global Energy CERA. The October deal announced by the White House is unlikely to add meaningful volume, and Congress banned Russian energy imports in 2022.
Seasonality. Heating oil demand rises from November, which typically supports diesel prices.
Outlook. Morgan Stanley expects the oil market to stay in deficit through the first quarter of 2027.
Where the negotiating leverage sits
Suppliers hold it, in the sense that no buyer can negotiate the price of fuel itself. Procurement’s leverage is in contract structure: the surcharge formula, the base price, the fuel economy assumption and audit rights. Two carriers can bill very different fuel on the same diesel price, as our diesel analysis shows.
Supply risk: what could go wrong
Physical shortages are rare in the U.S., but price spikes are not. An escalation in the Gulf, a refinery outage or a cold winter can move diesel by a dollar a gallon within weeks. In March, Dubai crude spiked to $169.75 a barrel when Hormuz traffic nearly stopped.
How to manage it
- Index every surcharge to the weekly DOE/EIA diesel price with a published table.
- Normalize base price and fuel economy across carriers in your RFPs so bids are comparable.
- Audit invoices against the table each month.
- Budget on current prices with a volatility band, not on a return to 2025 levels.
- Reduce fuel exposure: consolidate loads, raise trailer utilization and test intermodal on long lanes.
Our fuel surcharge guide walks through each mode.
What to watch
- Weekly EIA diesel prices.
- Strait of Hormuz traffic and any ceasefire talks.
- Winter heating demand and distillate inventories.
Price trend
U.S. producer price index for no. 2 diesel fuel (BLS series WPU057303), data through Aug 2026. Full price history.
Our coverage of diesel fuel
- USPS will add a weekly fuel surcharge to parcels in January 2027, ending its no-fuel-fee advantage over FedEx and UPSThe Postal Service announced Oct. 26 that a weekly fuel surcharge tied to EIA diesel and jet fuel prices will hit four domestic package services from January 2027, with percentages published only three to five days before each change.
- IEA says diesel stays tight well into 2027 as Houthi strikes on Aramco put the Gulf supply recovery at riskThe IEA does not expect distillate stocks to rebuild before the second half of 2027, and new missile strikes on Saudi energy sites threaten the Gulf export recovery that was easing prices, so fuel clauses in 2027 freight contracts need to hold up for another year.
- Truckload contract rates hit a 52-week high: how to run freight bids when capacity, not demand, sets the priceContract linehaul is up about 10% to 18% on the year depending on the index, carriers are exiting faster than freight is falling, and analysts say the repricing is only half done. Here is how procurement teams should approach bid season.
- Diesel near record highs: why the Russia supply deal and red-dye order won't bring fuel surcharges down soonRetail diesel is above $6 a gallon after a record above $6.50. Analysts say the announced Russian volumes are small against U.S. demand and the red-dye diesel order is short on specifics, so freight budgets should assume elevated fuel costs.
- Port of Los Angeles handles a record 1.04 million TEUs as shippers shift cargo away from the Panama and Suez routesSeptember was the busiest month in the port's 118-year history. Canal disruptions and fuel costs are pushing about 5% more cargo to Los Angeles at origin, and another early-2027 frontloading wave is likely.
- Steel, ocean freight and diesel lead input-cost pressure; resins and chips are easingOur new Cost Pressure Monitor tracks 12 categories procurement teams buy most. Seven are rising, led by steel and deep-sea freight, while aluminum, plastic resins and semiconductors have turned lower.
Questions procurement teams ask
Why is diesel so expensive in 2026?
The war with Iran has cut traffic through the Strait of Hormuz by more than 80%, refining margins for diesel are at multi-year highs, Russian refineries have been damaged by drone strikes, and winter heating demand adds pressure on distillates.
Will the Russian diesel deal lower U.S. fuel prices?
Analysts doubt it. S&P Global Energy CERA estimates Russia has exported only 100,000 to 150,000 barrels a day of diesel recently, and legal limits on Russian energy imports could prevent the fuel from entering the U.S. without new legislation.
How do fuel surcharges work?
Truckload surcharges usually take the weekly DOE/EIA diesel price, subtract a base price written into the contract and divide by an assumed fuel economy. LTL and parcel carriers usually apply a percentage of the freight charge from a weekly table.
Sources
- Procurement Signal — Diesel near record highs
- Procurement Signal — Six months into the U.S.–Iran war
- Procurement Signal — Fuel surcharge guide
- U.S. Energy Information Administration — Gasoline and diesel fuel update
- Procurement Signal: IEA sees diesel tight into 2027
- IEA — Oil Market Report, October 2026
- Procurement Signal: input-cost pressure report
- U.S. Bureau of Labor Statistics via FRED — No. 2 diesel fuel (WPU057303)
Leverage, supply risk and the recommended move are Procurement Signal's editorial assessment, built from the sources above. This is general market analysis, not advice on a specific contract. See our editorial standards.