While the world's attention remains fixated on Iran and the Strait of Hormuz, Russia's four-year war in Ukraine continues to exert an outsized influence on global energy markets—most visibly as U.S. diesel prices hit all-time highs at the end of this week.

The war in Ukraine has periodically disrupted oil flows in the Black and Caspian seas and damaged pipelines and terminals. But the biggest and fastest-growing impact comes from Ukraine's increasing success in striking Russia's refining network with long-range drones. An estimated 40% of Russia's oil-refining infrastructure is now offline, and Russia has cut off its diesel exports—removing roughly 3% of daily global diesel supplies from the market. Because refined products like diesel are traded globally, outages in one region ripple into pump prices far away, which is why strikes on Russian refineries are being felt by American drivers and businesses.

Combined with even larger refining outages in the Middle East and China's voluntary mothballing of some facilities due to reduced oil imports, the disruption has pushed the average U.S. diesel price to an all-time high of $5.85 per gallon on Friday, according to GasBuddy. The average U.S. gasoline price—$4.14 for a gallon of regular unleaded—is also the highest ever recorded heading into Labor Day weekend, surpassing the previous 2012 record.

"The Russia situation is really critical," said Matt Reed, president of the geopolitical and energy consultancy Foreign Reports. "It makes sense that the world's attention turned to Hormuz since the closure triggered the largest supply shock in history. Yet the real story now is refining constraints that are keeping fuel prices high. When the strait shut, the world tapped crude stocks, but we don't have the same kind of cushion for refined products."

"In 2026, we learned that the global oil market is surprisingly resilient while the refining ecosystem is extremely fragile," Reed told Fortune.

The U.S., for example, has aggressively drawn down its Strategic Petroleum Reserve of crude oil to 44-year lows to keep oil flowing. But there is no strategic reserve for refined fuels.

While gasoline prices directly affect most motorists, record diesel costs hit consumers indirectly through inflation. Cutting diesel demand would effectively mean shrinking the global economy: the farming and trucking industries depend heavily on diesel, and higher costs ripple into food prices and nearly everything consumers buy.

"Diesel is the fuel that moves the economy and, when diesel prices reach record levels, the impact extends far beyond the transportation sector," said Patrick De Haan, head of petroleum analysis at GasBuddy. "Higher diesel prices impact consumers as rising supply chain costs increase the price of groceries, household goods, deliveries, and countless other products Americans rely on every day."

How Did We Get Here?

Across Russia, the Middle East, and China, more than 10% of the world's oil-refining capacity is offline.

North American refineries have partially compensated by running at maximum output—earning record profits in the process. But after the busy summer driving season, many refineries typically enter September and October planning maintenance, reducing output and switching to winter-grade fuel formulations. Some will now delay that planned maintenance and stay online, but others will still go partially offline, including Canada's largest refinery near Maine and some U.S. Gulf Coast refineries. In short, the diesel shortage is unlikely to improve soon, said Gregory Brew, senior energy analyst at the Eurasia Group.

"That's going to put even more pressure on product prices in the U.S.," Brew told Fortune. "And that's likely to come in mid-September and it's going to last through November."

With so much Russian refining capacity knocked out by Ukrainian drone strikes, Russia halted diesel exports in July, extending the ban through September and potentially longer. Fuel shortages are most severe inside Russia, but they are contributing to global price spikes and regional shortfalls elsewhere. Russia is even refining some of its oil in Kazakhstan and ramping up gasoline imports to offset domestic shortfalls, further depleting global supplies.

When Russia first invaded Ukraine in 2022, oil and fuel prices surged worldwide—partly on fears the war would spread—but settled down after a few months once the conflict appeared contained. The Biden administration also deterred Ukraine from striking Russia's energy assets. That calculus has changed under Trump's second term, as Ukraine has dramatically improved the range and accuracy of its drone attacks.

"What's changed is how much success they've had at hitting their targets," Brew said of Ukraine. "That suggests that Russian air defenses have been slowly whittled down. The Russians can't shoot down Ukrainian drones and missiles with the same kind of effectiveness of a year ago. The Ukrainians are having more success hitting refineries, including around Moscow."

As for what happens next: "How does Russia respond?" Brew asked. "If they're seeing their domestic energy infrastructure slowly disintegrate, will that compel [President Vladimir] Putin to escalate the war to shift the balance more in his favor? I think that's a real risk."

From Oil to Fuel

While Russia has routinely targeted Ukrainian power plants—and may soon escalate those attacks—Ukraine's strategy has been more dispersed, ranging from oil tankers to pipelines, with its most successful results coming against refineries.

As a result, disruptions have spread beyond the two countries' borders. Russia's Nord Stream natural gas pipelines into Europe were sabotaged in 2022. Ukraine has previously struck the Druzhba oil pipeline system, which runs through much of Russia and into Europe, and has fired on Russian oil platforms, tankers, and terminals in the Black Sea.

Kazakhstan's oil production has also been periodically disrupted because it depends on the Caspian Pipeline Consortium, which runs through Russia. And as Europe has felt increasingly threatened by Russian incursions, NATO fighter jets destroyed a drone near Romania's natural gas projects in the Black Sea a week ago.

Yet global crude oil and natural gas markets have largely adapted to these occasional disruptions—partly because they don't occur all at once, partly by leaning on oil reserves, and partly through expanded renewable energy that reduces natural gas reliance.

Russia's large, immovable oil refineries, however, are big targets that cannot be easily repaired.

"We're seeing increasing tightness for refined products," Brew explained. "Diesel in particular is going up across the board in lots of different markets and that is, to a great extent, downstream of what Ukraine has been doing against Russia."

Ukraine may not necessarily be winning the war, but its attacks are inflicting mounting economic pain on Russia, and the global ripple effects are growing, he said.

"Where the balance is shifting more in their favor is this war against Russian energy," Brew said. "The Russians are having an increasingly hard time defending their domestic infrastructure. It's affecting the global energy market, and it might be compelling Russia toward pathways of escalation to improve the status quo in their favor."

This story was originally featured on Fortune.com.