On June 13, the global energy market reacted sharply to breaking news: Israel had carried out a strike on Iranian military targets. Early fears suggested a broader escalation could be underway, perhaps even one that would drag in Iran’s critical oil infrastructure.

While that didn’t happen (Iran’s oil facilities were untouched), the market didn’t wait for confirmation.

Diesel futures spiked nearly 8%. Crude oil prices jumped over 7%. The shock was immediate. But what does it really mean for companies relying on complex supply chains?

Diesel isn’t just another fuel; it’s the lifeblood of logistics. It powers trucks, ships, heavy equipment, and rail. When diesel prices jump, the cost of moving goods across the globe rises, often dramatically.

Here’s how these tensions ripple through supply chains:

1. Transportation Costs Climb

When fuel prices surge, carriers pass that cost along. Whether you’re moving goods regionally by truck or internationally by vessel, you’ll likely see:

• Higher fuel surcharges on freight invoices
• Increased last-mile delivery costs
• Contract renegotiations if the volatility persists

For businesses moving high-volume or long-distance goods, this can cut deep into margins, especially on fixed-price contracts.

2. Inventory Strategies Get Shaky

With fuel surges and geopolitical risk on the rise, many businesses are forced to rethink:

• Just-in-time models: Relying on minimal inventory from distant suppliers becomes riskier when transport costs are volatile.
• Buffer stock: Some may increase local inventory to hedge against shipment delays or cost spikes.
• Nearshoring: The case for moving suppliers closer to home strengthens when Middle East instability threatens global flow.

3. Global Delays & Insurance Premiums

Even though Iran’s oil infrastructure wasn’t hit, markets are bracing for what might come next:

• A retaliation from Iran that targets tankers, oil routes, or U.S. allies
• A closure or threat to the Strait of Hormuz, through which 20% of global oil flows
• Increased insurance premiums on ocean freight through conflict-adjacent regions

Any of these outcomes would lead to delayed shipments, port congestion, or route diversions, creating bottlenecks far beyond the Middle East.

4. Planning Becomes Harder

Logistics teams are already stretched navigating labor shortages, port delays, and capacity issues. Add diesel spike and geopolitical risk, and you get:

• Less reliable cost forecasting
• More frequent rate adjustments from carriers
• Urgency around contingency planning and supplier diversification

Why Diesel Reacted So Strongly

The reason diesel surged more than crude is simple: the market is tight.

• U.S. diesel inventories are 15% below the five-year average
• Much of the diesel supply depends on heavy crude grades from the Middle East
• Summer freight demand is ramping up, increasing pressure

So even a threat to supply sends prices skyward, especially when global reserves are already thin.

What Should Supply Chain Leaders Do?

This event is a clear signal: supply chains must become more resilient.

Here’s how companies are responding:

✅ Reassessing fuel clauses in logistics contracts
✅ Diversifying suppliers and routes to avoid chokepoints like the Strait of Hormuz
✅ Strengthening nearshoring strategies in North America and Latin America
✅ Improving forecasting models to factor in geopolitical volatility

You don’t need a refinery to be bombed to feel the impact. In today’s hyper-connected world, the possibility of conflict is enough to drive up costs, stress supply chains, and disrupt delivery timelines.

For any business dependent on the movement of goods, this moment is a reminder: geopolitical events, even halfway across the world, can land directly on your balance sheet.

Need help navigating fuel volatility and supply chain risk? Let’s start the conversation. Contact us today at [email protected] or visit us at glc-inc.com