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Diesel Hits Record High. The Energy Report 09/04/2026

By On September 4, 2026 - 9:14 AM · In Market Commentaries, Phil Flynn Energy Report
Diesel prices hit a record high of $5.85 per gallon nationally, according to AAA, surpassing the prior all-time high of $5.8159 set in June 2022 during the early days of the Russia-Ukraine war. The new record comes as Ukrainian drone attacks on Russian refineries have helped create a global diesel shortfall. Yet with the diesel crack spread falling — and signs that Russia and Ukraine may be ready to talk — the market may be signaling that we’re closer to a peak than people think.
Reports that Ukrainian President Volodymyr Zelensky has been in direct contact with US envoys Steve Witkoff and Jared Kushner — with talk of a possible September round of negotiations involving Russia — raise the prospect of a pause in Ukraine’s strikes on Russian refineries. Those strikes are precisely why Russian President Vladimir Putin’s government just extended its diesel export ban again, this time through September 30, after repeated drone attacks knocked out refining capacity and forced Moscow to prioritize the domestic market over exports.
If Ukraine eases off the refinery attacks, that alone could take pressure off the diesel squeeze. Add to that reports of rising diesel and crude flows through the Strait of Hormuz — the Trump administration has repeatedly pointed to increased tanker traffic through the strait as a sign the worst of that bottleneck may be behind us — plus more barrels coming from OPEC producers, record US oil production, and rising Iraqi output, and there’s a real case that once Russian refineries stop getting bombed, the diesel squeeze eases longer-term.
Trump’s push into Venezuelan oil investment and his pressure on US refiners to expand capacity should also mean we’re not permanently exposed to this kind of diesel squeeze going forward. Rather than shutting down refineries and oil fields — policies that, as we’re seeing now, put the broader economy at risk — the shift back toward expanding production and refining capacity is reversing what had been a shortsighted approach that helped fuel chaos, war, and higher costs for everyone. T
There is also a potentially significant diplomatic development on the Iranian front. The Financial Times reports that the Trump administration is seeking a new, broader agreement with Tehran that would address both the security and free flow of shipping through the Strait of Hormuz and Iran’s nuclear program, rather than simply revive the June memorandum of understanding. Such a framework could matter enormously for energy markets: a credible settlement that reduces the threat of attacks, mining, or shipping disruptions in the strait would lower the geopolitical risk premium embedded in crude and refined-product prices. It could also improve tanker availability, shorten delays, and restore confidence in a waterway that remains essential to global petroleum trade. The negotiations are far from assured, however, and any agreement would require enforceable commitments on navigation, regional security, sanctions, and nuclear oversight. Until those details emerge, traders should treat the diplomatic opening as a source of downside price risk rather than a completed solution.
For Now whose numbers are you trading?  Everybody wants to argue about who “owns” the Strait of Hormuz. Traders should care about something simpler: how many barrels are actually getting out. On that score, Washington is putting numbers on the board that Iran would rather you ignore.
Pre-war, this waterway was the world’s energy turnstile — roughly 100 ships a day and about 20 million barrels of oil. Then the shooting started and the strait went from highway to hostage. Six months later, the White House is saying the highway is coming back under American escort.
Two U.S. officials told CNN that on Tuesday 40 commercial ships carrying some 18 million barrels moved through under U.S. military escort — a wartime record.
 President Trump put a similar number on it Monday: the Navy helping about 30 ships a night. His line hasn’t changed: the waterway is “under USA control.” Last month he went further — “total control.” Treasury Secretary Scott Bessent filled in the oil math: “at least 10 million barrels” a day getting through, and 15 to 17 million on Monday.
CENTCOM’s Brad Cooper said the transit lanes have been cleared of mines. That’s the official U.S. tape. Those are the numbers the administration wants the market to price.
Iran’s story is the opposite: the strait is still theirs, closed except to pre-approved traffic in their channels, and anybody else is fair game. Fine. , But just saying it doesn’t make it so and with OMAN deciding not to play ball with Iran Ove the Distrait of Hormuz fee thing because they decided they don’t want trump to bomb them, Iran real can’t control the strait but just attempts to a carry out terror acts
 Yoyo see Tehran has been saying they have controlled the Strait  since February. The problem for the Iranian narrative is that product is showing up on the other side of the strait.
You don’t get 10-plus million barrels a day of claimed flow — and a Tuesday print of 18 million — if nothing is moving. Ship-trackers still count fewer hulls than the podium, and yes, some of those barrels are crude, not the diesel the pump is screaming about. But directionally the U.S. claim is the one that matters for the squeeze: more oil is getting out than the “Hormuz is shut” headline allows.
That’s why this belongs in the same conversation as $5.85 diesel. The pump record is real. The Russian refinery hits and Moscow’s diesel export ban through September 30 are real. But if Hormuz is leaking 10 to 18 million barrels on the better days instead of sitting at zero, you are not in the same market you were when TotalEnergies’ boss said there wasn’t a single products tanker coming out. Add record U.S. crude near 13.8 million barrels a day, Iraq trying to drag southern fields back toward pre-war rates, and the Venezuela offtake the White House is calling the biggest oil deal in history — and the “forever shortage” story starts to look like last month’s trade.
So trade the claims the way you’d trade any official print. The administration’s numbers: 30 ships a night, 40 ships and 18 million barrels on the record day, Bessent’s 10 million floor and 15–17 million Monday, mines out of the lane, strait under U.S. control. Iran says none of that counts. The market will settle it the only way it ever does — when diesel cracks stop printing century marks and the pump stops making new highs. Until then, don’t let the competing press conferences distract you from the barrels. The U.S. is saying the barrels are moving.
Let’s flip to natural gas. Yesterday’s EIA print: +30 Bcf. Working gas as of August 28 sits at 3,214 Bcf. That’s a touch under the 31 Bcf the Street was looking for, 50 Bcf below last year, and 160 Bcf above the five-year average of 3,054 Bcf — call it 5.2% over the five-year and 1.5% under year-ago. East and Midwest did the heavy lifting on the build. South Central and the West actually pulled a little. So the refill is still happening, just not a blowout. That’s a “so-so bullish / not a dump” print if you’re sitting in September gas.
Prices: front-month NYMEX is hanging around $2.91–$2.93. Thursday settled $2.913. Henry Hub spot is right there near $2.90. This is not a panic market. It’s a production-heavy market trying to decide whether Labor Day heat can chew through enough gas to matter before the shoulder season.
Production is the other half of the story. Dry gas in June ran about 112.3 Bcf/d — the highest daily rate for any month in that EIA series. Marketed production is on track for a record year near 122.5 Bcf/d. EIA’s last STEO had dry output averaging about 111 Bcf/d for 2026, inventories heading toward a record-ish end-of-October pile, and Henry Hub spending a lot of the next couple months under $3 unless weather or LNG feedgas surprises. That’s the longer-term tape: America is making a ton of gas. LNG is taking more of it than it used to, power burn still matters, but storage is not tight. Winter premium is in the curve; September cash is still cheap.
Now the weather — and this is why you keep Fox Weather open. They’re talking a late-summer heat wave that refuses to quit. Mid-90s to near 100 across a big slice of the central and eastern U.S. through Saturday, heat-index values 100 to 110, records in play for early September in spots. A little break Sunday into Labor Day, then the ridge looks like it wants to rebuild mid-next week. That’s power-burn weather. It’s not a polar vortex and it’s not going to empty the sheds by itself, but when you’re sitting on $2.90 gas and the country is still running air conditioners like it’s July, every extra degree is a bid. Download the Fox Weather app, watch the maps, and don’t trade this off a phone glance at the radar. Heat is the only near-term friend the bulls have.
Longer term: record production plus a comfortable storage surplus into October usually means the winter rally has to be earned by weather, LNG, or a freeze-off — not by a September storage scare. If this heat hangs on and the next couple EIA prints come in light, you can get a squeeze. If the ridge breaks and we keep stuffing 30-plus Bcf a week into the ground, $3 is a ceiling, not a floor. That’s the setup. Have a plan either way. Dowlaod the Fox Weather AP.
Stay tuned to the Fox Business Network for the rest of the energy tape. If you want the reports, call Phil Flynn at The PRICE Futures Group — 888-264-5665 or pflynn@pricegroup.com. If you’re ready to trade it, open a Price Group account and let’s do it the right way.
Have a great weekend. Stay cool, watch the heat, and I’ll see you on the open  Sunday Happy Labor Day.

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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