California’s diesel prices have jumped since the Iran war started, with ripple effects across the country

California is home to the highest fuel prices in the U.S. as well as the busiest containership port complex in the nation. So as the Iran war enters its sixth month and petroleum product prices remain elevated, consumers across the U.S. could be hit with higher prices for a host of everyday products. 

Nearly one-third of containership imports and exports travel through the San Pedro Bay port complex. In other words, before goods end up on shelves across the nation, they’re first hauled by trucks and trains paying California fuel prices. 

Since the war with Iran began, much of the focus has been on oil itself, but experts say petroleum product markets are much tighter — especially when it comes to diesel.

“I think this refining challenge is going to be with the world for a while,” ExxonMobil CEO Darren Woods told CNBC on Friday.

“Even after the strait opens up, we’ll see more products start to flow through the strait, which is going to be critically important. But we’ve still got the Russia capacity that’s been lost, and we’ll have to see what the Chinese do with respect to exporting,” he added.

The combination of the war with Iran and Ukraine ramping up attacks on Russian refining infrastructure means the world is now short about 8% of global diesel demand, according to Lipow Oil Associates’ Andy Lipow. 

Diesel is sometimes known as the workhorse of the American economy since trucks and trains that transport goods across the U.S. are powered by it. The U.S. is the world’s largest energy producer, but California’s fossil fuel industry has shrunk over the years and refiners have closed. The state also doesn’t have major fuel pipelines that connect it to other parts of the U.S., and has strict environmental regulations, all of which drive up prices at the pump.

The average price for a gallon of diesel in the U.S. is $5.36, according to AAA, but in California it’s $6.92, up from $5.10 before the war.

“[A] meaningful share of America’s supply chain pays West Coast fuel prices,” JPMorgan analysts led by Natasha Kaneva said in a June note to clients. “These prices influence freight costs, transportation margins, and ultimately the delivered cost of goods nationwide,” the firm added.

Watch the video above to hear more about how California’s fuel prices trickle through the U.S. economy.

— CNBC’s Macklin Fishman contributed reporting.