The U.S. Energy Information Administration raised its estimates for retail diesel prices this year and next as refinery margins for distillate fuels are kept up by tight global supply, while the AAA reported a new record-high price for the fuel Wednesday.

In its latest Short Term Energy Outlook, the EIA said it expects U.S. retail diesel prices to average $5.07 a gallon this year, up from its previous estimate of $4.85. The agency lifted its 2027 diesel price forecast to $4.40 a gallon from $4.07 a gallon.

Average U.S. diesel prices were a record $5.9424 a gallon Wednesday, according to the AAA. Diesel futures traded on the New York Mercantile Exchange were up 4.1% around $4.76 a gallon, and on track for their highest close since April 2022 in the early days of the Russia-Ukraine war.

The EIA raised its estimate for U.S. distillate crack spreads this year to 94 cents a gallon from 84 cents a gallon. It trimmed the estimate for 2027 to 63 cents a gallon from 67 cents a gallon. Crack spreads are the difference between the price of a barrel of crude oil and the products made from it.

U.S. average diesel crack spreads are expected to exceed $2 a gallon for August through November, and to decline steadily through 2027, the EIA said.

"This decrease assumes a return to normal tanker traffic through the Strait of Hormuz in the near term, allowing refineries in Saudia Arabia and Kuwait to increase exports of distillate to the global market," the agency said.

A return of crude flows from the Middle East should also improve supply to Asian refiners, easing international refining margins, but if flows remain constrained beyond the end of this year "we would expect to see higher distillate crack spreads globally than what is included in our current forecast," the EIA added.

The loss of refining capacity in Russia due to Ukrainian attacks continues to put upward pressure on global distillate prices, with the impact of outages expected to continue through the first half of 2027.

High U.S. exports of diesel to address loss of supply from the Middle East, Russia and China are expected to push U.S. distillate stocks below 100 million barrels this month, with inventories remaining under their five-year low all this year and for most of 2027, the EIA said.

"Low distillate inventories contribute to higher domestic diesel prices. We expect this effect will be particularly pronounced because of seasonal drops in distillate production and seasonal increases in distillate consumption during the fall and winter," the EIA said.