How Falling Diesel Prices Will Shape Freight Rates Through 2026

Diesel fuel prices are one of the most significant factors influencing freight costs, profitability, and overall supply chain performance. As we look ahead to the next 12 months, the outlook for U.S. fuel markets points to continued stability and even modest declines, especially in diesel. For shippers and carriers alike, this trend could mean lower operating expenses, improved rate stability, and opportunities to optimize logistics strategies. At TOP Worldwide, we’re monitoring these shifts closely to help our partners leverage fuel savings for greater efficiency and long-term growth.

This outlook is heavily influenced by the recent push to boost domestic oil production, which has reached record levels and is contributing to global oversupply. According to the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook released on October 7, 2025, U.S. crude oil production is forecast to average 13.5 million barrels per day (mbpd) in both 2025 and 2026 (up from prior estimates of 13.4 mbpd in 2025) driven by accelerated ramp-ups in Gulf of Mexico projects and sustained shale activity. This increase, combined with non-OPEC+ supply growth of 2.0 mbpd in 2025, is expected to outpace global demand, leading to rising inventories and downward price pressure.

Key Forecasts Include:

• Crude Oil (Brent benchmark): Averaging $69 per barrel in 2025, declining to $52 per barrel in 2026, with a quarterly drop to $62 per barrel in Q4 2025.
• Diesel Fuel (on-highway retail): Expected to average $3.65–$3.70 per gallon in 2025 (down about 3% from 2024’s $3.76 average), falling further to $3.46–$3.47 per gallon in 2026. Current prices as of October 2025 stand at approximately $3.71 per gallon, reflecting an ongoing slide from summer highs.
• Gasoline (retail): $3.10 per gallon in 2025, dropping to $2.90 per gallon in 2026.

The domestic production surge hit a monthly record of over 13.6 mbpd in July 2025. This decline is amplified by flooding the market, similar to past shale-driven oversupply episodes. Global factors like subdued demand (annual oil use growth of just 700 kbpd in 2025–2026) and a strengthening U.S. dollar further support lower prices, though risks like geopolitical tensions or refinery closures could introduce volatility.

Correlation with Historic Trends in Diesel Fuel Prices

The current downward trend in diesel prices aligns closely with historical patterns, where surges in U.S. domestic oil production have repeatedly led to oversupply and price corrections after peaks tied to global events or demand spikes. From 2000 to 2024, annual average U.S. No. 2 diesel retail prices exhibited high volatility, with crude oil costs accounting for about 50% of diesel pricing. Peaks often coincided with supply disruptions or economic booms, while troughs followed production booms or recessions.

Major peaks ($3.80+): 2008 (financial crisis oil rally), 2012 (geopolitical risks), and 2022 (war-driven supply shocks). Troughs (under $2.50): 2002, 2009 (recession), and 2016 (shale production surge to ~9 mbpd). The current trajectory, declining from 2022–2024 highs amid production hitting 13.5 mbpd, mirrors the 2014–2016 period, when U.S. output doubled via fracking, crashing prices by over 40%. Historically, diesel tracks crude oil tightly (correlation strengthened post-2010 shale era), with production increases like today’s exerting a dampening effect on prices during soft demand cycles.

Likely Impact on U.S. Shipping Rates in the Next 12 Months

Declining diesel fuel prices are poised to provide modest relief to U.S. shipping rates, particularly in trucking (which dominates domestic freight), by easing fuel surcharges that can comprise 20–30% of carriers’ costs. However, the overall freight market remains in a “correction cycle” with soft demand, limiting upside. Forecasts suggest truckload spot rates will rise only +2% year-over-year in 2025 (revised down from +4%), with a modest further increase in 2026, as lower fuel costs offset lingering capacity overhang from the 2023–2024 recession.

• Positive Factors: Diesel’s projected drop to $3.47/gallon in 2026 could reduce carrier operating expenses by 5–10%, enabling stable or slightly lower contract rates for shippers. Spot rates have already softened in late 2025 (e.g., dry van at $1.95–$2.05/mile), and falling fuel supports gradual recovery without sharp hikes.
• Challenges: Broader market weakness, tender rejection rates up but still low, potential tariffs extending recession into 2026, may cap gains. Ocean and intermodal rates could see similar stabilization, but trucking faces policy risks like 2025 regulatory shifts.

Overall, shippers can expect flat-to-modestly rising rates (1–3% increase), with fuel savings translating to better margins rather than aggressive rate cuts.

As fuel prices continue to decline, it’s the perfect time to strengthen your transportation strategy and maximize efficiency across every mode. At TOP Worldwide, we deliver customized logistics solutions designed to keep your freight moving, whether you need reliable full truckload shipping, flexible less than truckload options, fast expedited freight, efficient drayage services, or dependable ocean freight solutions. Partner with TOP Worldwide today to take advantage of lower fuel costs and achieve smarter, more cost-effective shipping results.

 Jeff Berlin

is the Chief Operating Officer of E.L. Hollingsworth & Co. and serves as the Senior Operations Executive for TOP Worldwide and Native American Logistics. With over 30 years of experience leading logistics and trucking companies, he brings deep industry expertise to his role. Jeff is also a CDL-A driver and a private pilot. Contact Jeff at jberlin@elhc.net.