Energy · MFGCalcs Magazine, Issue 1, November 2026
Two Oil Shocks, One Year
Crude nearly doubled, gave it all back, then climbed again
By Wes Calder. From MFGCalcs Magazine, Issue 1, November 2026, page 42.
In the first week of March, days after war broke out in the Middle East, the national average price of diesel was less than a dime a gallon above its prewar price. The next week it jumped almost a dollar, the largest one-week rise in the Energy Information Administration’s weekly series.
That month, a Texas wholesaler of nondurable goods gave the Federal Reserve Bank of Dallas its timetable: “Over the very short term (less than 30 days), we will absorb some of this cost. But next month, we will need to raise prices because diesel is a direct cost in shipping and significantly impacts our margins.”
Crude would give its spring climb back by July, then climb again. Diesel never came all the way down: at the pump there has been one long shock since March, not two.
Take a truck built for this story: it runs 100,000 miles a year at 6.5 miles a gallon and buys its diesel at the national average price. In the second week of January it paid $3.46 a gallon. In the third week of September it paid the highest weekly price the EIA has published since it began the series in 1994, and at that price a year of its fuel would cost about $47,000 more than at January’s. (The EIA changed its survey method in June 2022, the agency says, so comparisons across that month are close but not exact.)
On Feb. 28, according to the EIA, military action in the Middle East stopped most tanker traffic through the Strait of Hormuz, and Iraq, Saudi Arabia and the United Arab Emirates shut in production. In under six weeks Brent, the world’s benchmark crude, nearly doubled. In March, an exploration and production firm told the Dallas Fed’s energy survey what dearer oil had done to its plans: “We are drilling six wells in 2026 vs. zero prior to the increase in oil prices.”
The bank’s wider soundings were warier. In early June, it reported in the Federal Reserve’s Beige Book that its district’s oil and gas contacts still had little appetite for more activity, because they expected the war’s lift to oil prices to fade too soon to justify new investment.
For a while, crude bore them out. By the last days of June, Brent had closed below its prewar price, and in July it fell to its lowest since early February. Diesel came down only partway. In the week of July 6, the truck paid $4.58 a gallon, still 77 cents more than in the last week before the war. Crude had given back all of its spring climb; diesel, a little more than half.
On crude’s chart, the first shock was over. On the truck’s bill it had only eased.
Refiners earned more in the second quarter, while the first shock played out, than in any other quarter in Bureau of Economic Analysis records for petroleum and coal products, which begin in 2001. In April the Dallas Fed surveyed Texas manufacturing and service firms and asked those that said the war had hurt them how they had responded. Among the manufacturers, the most common answer was to raise selling prices.
Renewed strikes began on July 7, the EIA says, and grew into attacks on tankers, a U.S. blockade of Iranian oil exports and strikes on energy infrastructure from the Bab el-Mandeb Strait to Russia’s Black Sea terminal at Novorossiysk. By the third week of July diesel was back above $5 a gallon, and it has stayed there every week since.
Diesel set its record with crude well off its high. On Sept. 21, the Monday of the record week, Brent closed more than $20 a barrel below its April peak. The EIA’s account turns to refining: the margin refiners earn turning crude into diesel and jet fuel almost tripled from a year earlier in the third quarter, the agency says, as refining in Russia, China and the Middle East was disrupted and U.S. exports ran high. By late September, it says, U.S. stocks of distillates (diesel and heating oil) were 13% below their five-year average. The pump price also includes taxes and distribution costs, which these data do not break out.
Crude’s second climb peaked on Oct. 2, the day Brent rose by more dollars than on any other day in the EIA’s daily records, which begin in 1987. Brent has since eased to about where it stood the day before that jump.
In September, a Texas maker of nonmetallic mineral products told the Dallas Fed how it was pricing its next jobs: “The price of diesel fuel is hurting our gross margin. We are unable to pass this through to our customers. We are bidding new jobs using $6.00 [per gallon] for diesel cost.” Diesel’s national average, in the week of Oct. 19, was $6.28 a gallon: less than at September’s record, and more than in any week before this year.
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Last reviewed 2026-10-26.