Diesel hit a record high on Monday and the price of crude oil climbed higher Tuesday as it’s becoming more clear that President Donald Trump has started a war he can’t win with Iran. Those prices are very bad news for Americans who are feeling the bite of both stubborn inflation and stagnant wages. And that’s to say nothing of the human cost the war is inflicting, including the U.S. strike on a wedding party last week that killed four civilians and wounded dozens more.
The average price for a gallon of diesel in the U.S. hit $5.90 on Labor Day, according to AAA, the highest ever recorded in the U.S. The current average for a gallon of gas is $4.15, lower than the historic high of $5.05 reached in June 2022, but still well above the price before the war, $2.98.
Brent crude oil spent Tuesday flirting with the $100 mark and currently sits just above $99. That’s lower than the $114 price hit in early May but significantly higher than July when the price got as low as $71.
There is the question of why oil prices would be climbing now, since the reality on the ground in Iran has changed so little over the past six months. The U.S. and Israel first attacked Iran on Feb. 28, and there’s been a pretty regular exchange of fire from both sides ever since, despite declarations of a “ceasefire,” in June. One commentator gave a very plausible explanation Tuesday on CNBC.
Apparently reiterating his own remark from Aug. 17, Bob McNally, president of Rapidan Energy Group, said on a broadcast Tuesday that China had previously been on a “crash diet,” referring to that country’s scaling back of oil purchases immediately after the war began. China was importing about 12 million barrels of oil per day in Feb. 2026, just before the war, according to Bloomberg. That was essentially cut in half by June but is getting closer to 10 million per day now.
McNally also explained that strategic petroleum reserves globally were dwindling. The U.S. Strategic Petroleum Reserve is currently at its lowest level since 1982, according to Reuters. The last big factor, according to McNally, is that the markets have been operating on what he calls an “optimism bias,” believing that Trump would wind down the war and hopefully allow more oil to flow out of the Strait of Hormuz.
“Summer is over. Peace didn’t happen. The war is still going on,” said McNally.
Indeed, the war continues to drag on with no end in sight. Iranian state media claimed that the military was able to seize an unmanned submersible in the Strait of Hormuz on Tuesday, though the Pentagon tried to downplay the news, claiming it was “defective,” and not carrying classified information. And Fox News reported Tuesday that U.S. forces had hit oil tankers near the strategically important Kharg Island and port city of Jask.
In response, Iran’s Revolutionary Guard Navy has reportedly warned crews on oil tankers operating near Kuwait and Bahrain to leave their vessels immediately, according to the Associated Press.
Trump started a war with no plan to get out successfully. U.S. forces currently escort some allied ships through the Strait and enforce a blockade against Iranian oil leaving the area to be sold on the international market. But it’s not clear how the U.S. could ever leave in this scenario. Iran is likely to keep shooting at tankers in the Strait and the U.S. will just have to remain if it doesn’t want Iran completely controlling passage through a toll system. As Colin Powell infamously said before the invasion of Iraq in 2003, “you break it, you own it.”
The U.S. has reported 18 American troops killed and 820 wounded since the start of the war, according to ABC News. At least 3,000 Iranians, 4,000 Lebanese and 23 Israelis have also been killed, according to NBC News.
