Energy Analyst Says Diesel Prices Correlate More Closely With Treasury Yields

Diesel prices have correlated more closely with 10-year Treasury yields than crude prices since May, energy analyst Amrita Sen said, linking refined-fuel costs to inflation concerns affecting U.S. markets.

“Ultimately, diesel and gasoline drive inflation, not crude oil,” Sen said.

The national diesel average reached a record $6.5276 per gallon on Sept. 22. It stood at $6.3895 on Oct. 1, compared with $3.7068 a year earlier.

The 10-year Treasury par yield reached 5.28% on Oct. 7 before easing to 5.22% on Oct. 8 and 5.24% on Oct. 9. The benchmark is widely used to assess U.S. borrowing costs, including rates tied to loans and other financing.

President Donald Trump announced Oct. 9 that Russia would supply more than 300,000 tons of diesel immediately, followed by 500,000 tons in November and 1 million tons “immediately thereafter.” He also said Russia could deliver 3 million tons within a short period, depending on refinery conditions.

“I have just concluded a highly successful discussion with President Vladimir Putin, of Russia, wherein it was agreed that Russia will immediately supply over 300,000 Tons of Diesel Fuel to the American and Global Marketplace, another 500,000 Tons during the month of November, and 1,000,000 Tons immediately thereafter,” Trump said.

The announcement did not specify how much fuel would enter the United States. It also did not establish that any of the promised volumes had been delivered.

The Office of Foreign Assets Control (OFAC) issued General License 135 on Oct. 9, authorizing the sale, delivery, offloading and importation of Russian-origin diesel through 12:01 a.m. ET (04:01 UTC) on April 7, 2027. The authorization creates a legal pathway for eligible transactions but does not confirm that Russian diesel has entered the United States or been sold there.

An Oct. 5 executive order separately directed the Treasury Department to defer certain diesel tax obligations and provide penalty relief for specified dyed-diesel transactions from Oct. 5 through Dec. 31. The federal diesel tax is 24.4 cents per gallon, making the tax on a 250-gallon fill about $61, close to the stated relief figure of about $60.

Diesel is used extensively in trucking, agriculture, construction and manufacturing. Changes in refined-fuel prices can therefore affect transportation, food and other goods, adding to inflation concerns already weighing on the bond market.

The development follows the recent rise in Treasury yields amid energy-price concerns.