NEW YORK / RankWire.AI / – The cost of diesel remains elevated due to ongoing supply shortages and refinery disruptions in the United States and Europe. U.S. ultra-low sulfur diesel futures surged 7.4% on Monday, closing at $4.19 a gallon, marking the largest single-day increase since July 13. As of early Wednesday, the contract traded near $4.28 a gallon, reflecting continued tightness in refined-product markets across major consumption regions.
Current diesel inventories in the U.S. are significantly below recent seasonal averages. According to the U.S. Energy Information Administration, distillate stocks totaled 107.2 million barrels for the week ending July 31, which is 3.5 million barrels less than the previous week. These inventories are also 5.1% lower than the same period last year and 16.1% below the levels recorded in 2024. Distillates include diesel and heating oil, both crucial for transportation, industrial use, and seasonal energy needs.
Despite a slight weekly decline, retail diesel prices in the U.S. remain high. The national average reached $5.257 per gallon on August 10, down from $5.348 the previous week, yet still well above the $4.578 average observed on July 6. Similar pressures are evident in European markets, where low-sulfur gasoil margins have surged. The premium over crude oil hit a record $74.66 per barrel on July 30, as the market for finished diesel became increasingly valued.
Refinery outages exacerbate global diesel shortages
A number of refinery outages have further restricted the global supply of diesel available to international markets. An attack damaged a refinery in Russia’s Tatarstan region, compounding the impact of lower processing activity within the country. Meanwhile, Saudi Arabia’s Jazan refinery has been offline since July 27 following an earlier attack, removing a significant source of refined products from the global trade system. During June, refinery operations in several key regions had already fallen below year-earlier levels, limiting the flow of fuel into international markets.
In addition, export restrictions have hindered the movement of refined products. Russia extended its bans on gasoline and diesel exports through January 31, 2027. Meanwhile, vessel traffic through the Strait of Hormuz has decreased sharply, affecting Middle East shipments. Domestic refinery activity in China has also weakened, resulting in lower supplies of refined fuels. The European Central Bank reported diesel pump prices near €1.98 per litre in the third week of July, with higher refining margins contributing more significantly to retail fuel costs.
US refinery throughput remains vigorous despite low inventories
Despite processing large volumes of crude oil, U.S. diesel inventories have not returned to typical seasonal levels. Crude inputs in the first seven months of 2026 reached their highest since 2019 for that period. Refinery utilization rates stayed high as processing margins grew. Nonetheless, distillate stocks at the start of August were at their lowest for this time of year in nearly thirty years. This inventory shortfall coincides with reduced product flows from several overseas refining centers.
Crude oil prices also increased on Wednesday, with Brent near $89.81 a barrel and West Texas Intermediate around $84.08. Nonetheless, diesel prices face additional upward pressure primarily because of shortages in finished fuel, rather than crude supply alone. Diesel supports key sectors such as trucking, agriculture, construction, and manufacturing across both regions. Ongoing tightness in the global diesel market is driven by low U.S. inventories, high European refining margins, refinery outages, and export restrictions, all contributing to persistent supply challenges for middle-distillate fuels.