Freight Fuel Forecast: Is Your Budget Ready for $70 Brent?

Summary View Transcript Despite falling diesel prices, the oil market shows dangerous complacency. John Kingston from FreightWaves breaks down why current inventory draws and global supply disruptions suggest a looming crisis in the next 4-6 weeks. Discover the overlooked factors that could send fuel prices soaring, impacting your freight budget.

Average weekly retail diesel prices fell to $4. 83 per gallon — below $5 for the first time in an extended period — but a freight fuel analyst is warning that the apparent calm in energy markets is masking a structural supply problem that could hit carriers and shippers within weeks.

Bank of America estimated that more than 1 billion barrels of oil supply have been lost since March, according to the analyst. The reason prices have not spiked further, he argued, is a sustained draw on petroleum inventories rather than genuine demand destruction.

"We know that the market has lost roughly about — I think Bank of America estimated it more than 1 billion barrels of supply since March," he said. "I do not think that there's been enough demand destruction to offset that."" The reason that we haven't really had a total crisis is because of a massive inventory draw. Those inventories need to be restocked."

The analyst placed the window for a potential tank-bottoms crisis — an industry term for petroleum storage reaching critically low levels — at the next 4 to 6 weeks.

Beyond that near-term risk, he said the longer-term question is whether major producers including Iraq, Kuwait, Saudi Arabia, and the United Arab Emirates can restore shut-in production over 3 to 4 months. Oil wells, he noted, cannot be restarted like flipping a switch.

For 2026 budget planning, the analyst recommended shippers and dispatchers assume Brent crude will run roughly $10 per barrel higher than pre-war levels — landing near $70 per barrel — rather than reverting to pre-conflict norms.

The International Energy Agency's June report and Bank of America both projected a significant supply surplus over demand in 2026, driven by increased output from the U. S. , Canada, Brazil, and Guyana.

The analyst said he is skeptical that surplus will materialize as cleanly as forecasters expect, in part because the Strait of Hormuz closure has introduced a persistent geopolitical risk premium on barrels transiting the waterway.

On the question of whether diesel prices directly drive spot freight rates, both the analyst and a co-host pushed back on the conventional narrative. Spot trucking rates began rising around mid-to-late November, a period when diesel was weak and declining.

One co-host noted that during an earlier freight recession, diesel hit a five-year high while rates sat at multi-year lows.

The analyst said the two markets run on separate tracks, though he acknowledged that an acute fuel price spike could push marginal owner-operators — who lack fuel surcharge mechanisms available to large carriers — to park trucks, tightening capacity and pushing rates higher. Carrier financial health remains a concern even as rates climb.

The analyst cited reporting from a colleague tracking freight bankruptcies, noting that more insolvency stories are being written now than ever despite the rate recovery, as battered balance sheets from the prolonged freight recession continue to claim operators regardless of the current market upturn. Retail diesel dropped to $4.

83 per gallon, but Bank of America estimates more than 1 billion barrels of supply have been lost since March, sustained only by inventory draws. A tank-bottoms crisis could emerge within 4 to 6 weeks; full production recovery from Iraq, Kuwait, Saudi Arabia, and the UAE may take 3 to 4 months.

Shippers building 2026 fuel budgets should assume Brent crude near $70 per barrel u2014 roughly $10 above pre-war levels u2014 rather than counting on a significant price decline. Malcolm Harris [0:00] John, what's up, sir? How are you? John Kingston [0:05] Well, really, the question is what's down. Okay. The price of gas, the price of oil is down.

And the Department of Energy, Energy Information Administration, average weekly retail diesel price, which is the basis for most fuel surcharges, dropped below $5 a gallon for the first time since, you know, in a long time. $4. 83. The futures market is about where theu2014 about the lowest it's been.

I think it's probably going to settle out today at the second lowest it's been since the war started. So I, I'm kind of amazed at this. I will tell you that I, I think that theu2014 it seems the trading community is just completely accepting that everything's going to be normal, everything's going to be fine.

Uh, you know, we've got an agreement that would open up the Strait of Hormuz. We haven't really even confirmed that the strait is fully open or what the status is. There has been a fair amount of oil that's been movedu2014 oil and other things that have moved through it. The past couple of days. But I guess I'm just stunned at the to