Since the start of the war in Iran, investors have focused almost exclusively on crude oil benchmarks.

Yet the most important shock in energy markets may be happening elsewhere, in refined fuels like diesel, where prices and refining margins are now rising far faster than crude.

The national average price of diesel crossed $5.044 per gallon on Tuesday, according to American Automobile Association, the first time it has breached that level since the post-Ukraine energy shock of 2022.

Three states are already above $6: California at $6.49, Washington at $6.11, and Hawaii at $6.01.

The surge reflects a powerful rally in wholesale diesel markets. NY Harbor ultra-low sulfur diesel (ULSD) futures climbed to $3.80 per gallon on Tuesday, marking a 46% surge since the start of the Middle East supply disruption.

Converted into oil market terms, that price implies roughly $159.60 per barrel of diesel.

That's nearly $64 above crude WTI prices, creating one of the widest refining margins since the last global energy crisis.

Chart: Oil WTI vs. ULSD Futures, Performance Since The Start Of The War In Iran

Why Refined Products Are Getting Hit Harder Than Crude

Diesel prices are rising primarily because disruptions in Middle East oil flows and refinery outages are restricting the global supply of middle distillates, the category of ...