U.S. diesel prices have climbed to a record, raising concerns that higher fuel costs could eventually feed into consumer inflation and strengthen expectations for additional Federal Reserve rate hikes. The central bank appears willing to continue tightening even as an oil supply shock contributes to the latest price pressures.

The national average for diesel reached $6.29 per gallon this week, an all-time high and nearly 80% higher than at the start of the year, according to TradingView. Bitcoin was trading near $76,400, down almost 12% year to date, while gold was broadly flat after falling from its record high of $5,600 set earlier this year.

Geopolitical tensions in the Middle East have been a major driver of the diesel surge. The ongoing U.S.-Israeli conflict with Iran has disrupted crude oil flows and increased risk premiums for refined fuels. Tight refinery capacity, combined with strong demand from freight and industrial users, has added to the upward pressure and helped turn a regional supply disruption into a broader energy-price shock.

Higher diesel costs can spread through the economy by increasing transportation expenses and supply-chain costs, eventually putting pressure on consumer prices.

“Higher diesel prices can show up in inflation through business costs first, then potentially affect consumer prices over time depending on pass-through and demand,” JPMorgan said in a Tuesday note.

The surge comes as central banks remain focused on elevated inflation and consider further monetary tightening. Higher rates can raise financing costs and weaken demand, but they are unlikely to directly resolve inflation caused by oil supply disruptions associated with conflicts involving Iran and Ukraine.

The Federal Reserve raised its benchmark interest rate by 25 basis points on Thursday, lifting the target range to 3.75%-4%. Some observers have argued that additional rate increases may not effectively address inflation caused by an energy supply shock.

Goldman Sachs and Morgan Stanley expect another 25-basis-point rate increase from the Fed in October. Other central banks are also moving toward tighter policy. The European Central Bank recently raised rates, while the Bank of Japan is expected to follow with a hike on Friday.

The continued rise in diesel prices could weigh on assets including Bitcoin, gold and technology stocks. Bitcoin is often viewed alongside gold as a store of value and a potential hedge against sovereign risks, but its history shows that higher borrowing costs can pressure its market value, as seen during the Fed’s 2022 tightening cycle.