What drives petroleum product prices: Trade

The global trade of petroleum products facilitates efficient flows of fuels to regions short on supply. These flows mitigate price spikes, encouraging prices in different regions of the world to generally move together.

However, disruptions to trade flows increase the risk of supply shortages and can cause price spikes. For example, in 2022, petroleum product prices rose in response to the various sanctions the United States and many U.S. allies, particularly in Europe, announced against Russia’s petroleum industry following its full-scale invasion of Ukraine. Diesel prices in particular increased sharply because about half of Europe’s diesel imports came from Russia prior to the sanctions, leaving European countries scrambling to find alternative sources, often from more distant regions. Although the United States only imported small volumes of distillate fuel oil from Russia, the resulting tightness in Europe encouraged increased U.S. exports, tightening supply and raising prices. As markets adjusted to new trade routes, the effects on prices subsided.

Data source: Bloomberg, L.P., U.S. Energy Information Administration
Note: ULSD = ultra-low sulfur diesel. Real prices are adjusted to July 2025 dollars.

Disruptions to trade flows are sometimes related to reduced marine vessel traffic through global oil transit chokepoints—narrow sea lanes vital for global oil transport&mdahs;like the Panama Canal and the Strait of Hormuz. International energy markets depend on reliable transport routes. The inability of oil to transit a major chokepoint, even temporarily, can lead to substantial supply delays and higher shipping costs, resulting in higher prices for petroleum and petroleum products. For example, in 2023, a drought limited traffic through the Panama Canal, increasing shipping costs for many commodities, including petroleum products.