Brent Crude Hits $110.37 — Up 2% on Strait of Hormuz Tensions

Why did oil prices jump to $110.37 per barrel?

Brent crude — the international oil benchmark that drives US diesel prices — climbed 2% to $110.37 per barrel May 4 as tensions escalated over the Strait of Hormuz. The move extends a two-month rally that has pushed Brent from the mid-$90s in early March to a level not seen since the 2022 supply shock.

The Strait of Hormuz carries roughly one-fifth of global oil supply. Any threat to shipping through the narrow waterway — whether from military action, mining, or blockade — immediately prices risk into crude futures. The 2% single-day gain translates to roughly $2.16 per barrel, which refiners pass through to diesel within days.

For a five-truck fleet running 500 miles per day per truck at 6 mpg, a $2 per barrel oil move adds roughly $0.06 per gallon to diesel cost. That works out to an extra $25 per day across the fleet, or $750 per month if the price holds. Fleets without fuel surcharge agreements absorb the full hit.

How long the $110 floor lasts

Brent has now held above $100 per barrel for nine consecutive weeks. The April average was $105.22. May opened at $109.88 and has added $1.49 in the first four days. Oil executives warned in late April that war-driven supply disruption would persist for months after any ceasefire, as damaged infrastructure and insurance constraints slow the return of Iranian and regional barrels to market.

Diesel futures have lagged crude by roughly one week in recent moves. The DOE retail diesel benchmark fell three weeks in a row through April 28, dropping 29.2 cents to $5.35 per gallon, but AAA's real-time tracker reversed course April 29 and has climbed since. The May 4 crude jump will likely show up in pump prices by mid-week.

Small fleets that locked fuel hedges or surcharge floors in March — when Brent was still in the $90s — are insulated through contract expiry. Fleets running spot or on thin surcharge clauses are paying the full $110 equivalent at the pump, which pencils to roughly $4.30 per gallon diesel before state taxes and retail margin.

What a sustained $110 crude price does to operating cost

A 10-truck fleet running 1,000 miles per day per truck at 6 mpg burns 1,667 gallons per day. At $4.30 per gallon, that's $7,168 daily fuel cost, or $214,000 per month. The same fleet paid roughly $3.50 per gallon in early 2024, when Brent averaged $82. The $0.80 per gallon increase adds $1,333 per day, or $40,000 per month.

Spot rates have not kept pace. DAT's dry van national average spot rate was $2.14 per mile in April, up 4 cents from March but still 18 cents below April 2023. Contract rates have been flat for three months. The fuel cost squeeze is tightest for fleets that haul short-haul or regional — where fuel surcharges are less common and where the per-mile fuel cost is higher due to lower average speed and more idling.

Fleets with diversified fuel sources — natural gas, renewable diesel, or electric for local routes — hedge a portion of the crude-price risk. Renewable diesel tracks soybean oil and used cooking oil feedstock prices, which have climbed but not at crude's pace. Compressed natural gas trades closer to US natural gas futures, which remain near $2.50 per MMBtu — roughly half the energy-equivalent cost of diesel.

The bill for a small fleet if Brent holds at $110

A three-truck owner-operator fleet running 400 miles per day per truck at 6 mpg burns 200 gallons per day. At $4.30 per gallon, that's $860 daily, or $25,800 per month. The same fleet paid $700 per day in early 2024. The $160 daily increase — $4,800 per month — comes straight out of settlement if the fleet has no surcharge protection.

Fleets that run dedicated or contract lanes with fuel surcharge clauses tied to the DOE index recover most of the increase within two weeks, as the DOE benchmark adjusts. Fleets on the spot market or running for brokers without surcharge agreements eat the full cost. The difference between a protected and unprotected fleet at current crude prices is roughly $1,600 per truck per month.

Brent crude has traded in a $103 to $110 range for the past two weeks. If the Strait of Hormuz remains contested, the floor stays high. If tensions ease or alternative supply routes open, crude could fall back toward $100. Either way, diesel will lag crude by a week, and pump prices will lag diesel futures by another three to five days. Small fleets planning fuel buys or negotiating surcharge terms should assume $110 crude persists through May.