March 4 (Reuters) - Average U.S. retail diesel prices surpassed $4 a gallon for the first time in nearly two years on Wednesday and are set to rise further later in the week as the U.S.-Israel conflict with Iran dragged on, threatening to hit consumers with sticker shocks on everything from food to furniture.

Prices for diesel, used mainly in manufacturing and freight, have been on a tear since Iran began retaliating against U.S. and Israeli strikes on the country by bombing energy infrastructure across the Middle East and disrupting shipping in the Strait of Hormuz, a key global trade route.

The U.S. dollar inched lower on Wednesday, halting two days of hefty gains, after some strong economic data offset an ongoing hit to sentiment from the escalating conflict in the Middle East. Still, safe-haven demand remained high and the greenback hovered near six-week highs. 

At 13:40 ET (18:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% to 98.89.

Bitcoin surged on Wednesday to a one-month high, as risk assets in general caught a bid following solid U.S. economic data. The digital asset also took support from President Donald Trump’s calls for better regulatory support for the cryptocurrency industry.

Bitcoin jumped 7.7% to $73,488.9 by 17:02 ET (22:02 GMT) after trading in a tight range in recent weeks. 

Oil prices rose sharply Monday on concerns of increasing supply disruptions after the U.S. and Israel launched a wave of attacks against Iran. 

At 11:23 ET (16:23 GMT), Brent oil futures surged 6.8% to $77.80 a barrel, after earlier climbing to its highest level since January 2025, while West Texas Intermediate crude futures rose 5.7% to $70.85 a barrel, just below its highest level since June.