Ultra-low sulfur diesel futures on the CME jumped roughly 20 cents in about two hours Tuesday morning, after briefly trading negative the day before. The swing rattled diesel consumers already facing depleted inventories and thin policy options, and one market watcher now warns prices could push back above $6 per gallon — potentially well above it.

John Kingston, who tracks energy markets for FreightWaves, laid out the intraday mechanics. The contract was down a few cents Monday. It recovered to roughly 9 cents positive about two hours before he spoke. Then it jumped to up 20 cents just 10 minutes before air.

"We're just running out of bullets," Kingston said. "There are no more bullets in the chamber. The inventories have been drawn down."

He put it more bluntly still: "In the last 2 hours, I'd be real worried if I was a diesel consumer. I think what's happening today is really, really concerning."

What does the red-dyed diesel waiver actually deliver?

The Trump administration decided to allow red-dyed diesel — normally reserved for tax-exempt, non-road uses such as farming — to be used over the road. Kingston sees a fundamental supply-chain problem with that plan.

Red-dyed diesel sits segregated from standard road diesel. Major truck-stop chains such as Love's, TA and Pilot are unlikely to drain and reconfigure tanks for a program that expires December 31. There's also a tax snag: the federal excise tax break embedded in red-dyed diesel was established by Congress, so the executive branch cannot waive it.

"The supply chain is not set up to get red-dyed diesel out of agricultural supply chain down to the supply chain that includes Love's and Pilot and TA," Kingston said.

For trucking fleets, the practical takeaway is simple. A waiver on paper is not diesel in the tank. The retail network that actually fuels over-the-road trucks has little incentive to rebuild infrastructure for a two-month program.

What's happening on the international side?

A proposed U.S. diesel export ban was pulled back roughly two weeks ago, Kingston noted. In response, G7 nations and other Western economies agreed to release strategic stocks totaling around 100 million barrels of crude and products into the market.

The more urgent signal came just two days ago. Fatih Birol, executive director of the International Energy Agency, contacted IEA member nations and told them to speed up strategic stock releases — specifically prioritizing diesel over gasoline, according to Kingston.

That prioritization matters. It tells you which product governments think is closest to shortage. When the IEA's top official calls members directly about diesel specifically, the diesel market is the fire.

Hormuz flows are deteriorating again

Flows through the Strait of Hormuz had briefly improved toward pre-war levels, helping push oil and diesel prices lower about a week ago. The latest data show those flows deteriorating again amid renewed Iranian attacks on oil infrastructure, putting geopolitical risk back into the price picture.

Kingston said he would not be surprised if Iran de-escalates after the U.S. midterm primaries. His precedent: Iran released American hostages the day Ronald Reagan took office in 1981.

Could this crunch accelerate electrification?

Longer-term, Kingston sees a second-order effect. The diesel crunch could push previously undecided buyers toward electric vehicles.

A year ago, he noted, all three major monthly oil supply-demand reports — from OPEC, the IEA and the Department of Energy's Short-Term Energy Outlook — were signaling downward pressure on oil prices, partly due to EV penetration. EV share of new vehicle sales had reached roughly 40% in markets such as Norway or China.

Higher diesel and fuel prices will likely push fence-sitters toward electrification, he said: "It's already been a factor, and it's probably going to be a factor again."

What does this change for shippers and carriers?

For carriers, the arithmetic is unforgiving. Inventories are drawn down, the red-dyed workaround won't reach truck-stop pumps at scale, and strategic releases — even 100 million barrels — take time to land in distillate markets. Fuel surcharges will chase a spot market that moved 20 cents in two hours.

For shippers, that means surcharge lags and fuel-adjustment clauses will be tested. Budget off last quarter's diesel assumptions at your peril.

With Hormuz flows weakening again and the IEA pressing members to prioritize diesel releases, the near-term trajectory points to tighter supply and higher, more volatile prices.