NEW YORK / RankWire.AI / – Persistent high prices for diesel are driven by limited inventories and refinery outages impacting fuel supplies in both the United States and Europe. On Monday, U.S. ultra-low sulfur diesel futures surged by 7.4%, settling at $4.19 per gallon, marking the largest daily increase since July 13. As of early Wednesday, the contract hovered around $4.28 a gallon amid ongoing market signals of tight supply in major consumption regions.
The U.S. continues to see diesel stock levels that are significantly below recent seasonal averages. According to the U.S. Energy Information Administration, distillate stocks for the week ending July 31 totaled 107.2 million barrels, representing a decrease of 3.5 million barrels from the previous week. These inventories are also 5.1% lower than last year’s figures and 16.1% below the same period in 2024. Both diesel and heating oil, which are critical for transportation, industry, and seasonal energy needs, are included in these distillates.
Despite a slight weekly decline, retail diesel prices remain elevated. The national average hit $5.257 per gallon on August 10, down from $5.348 one week earlier, yet still well above the $4.578 recorded on July 6. Similar pressures are evident in European fuel markets, where margins for low-sulfur gasoil have surged. The premium over crude oil reached a record $74.66 a barrel on July 30, reflecting higher values for refined diesel.
Refinery outages contribute to declining global diesel supplies
The global availability of diesel has been further restricted by several refinery disruptions. An attack damaged a refinery in Russia’s Tatarstan region, which has compounded the decline in processing activity within the country. Since July 27, Saudi Arabia’s Jazan refinery has remained offline following an earlier attack, removing another key source of refined products from international markets. Across multiple producing regions, refinery runs fell below year-ago levels during June, reducing the volume of fuel supplied to global markets.
Export restrictions are also limiting the flow of refined products. Russia extended restrictions on gasoline and diesel exports through January 31, 2027. Meanwhile, vessel traffic through the Strait of Hormuz from the Middle East has decreased sharply. China’s domestic refinery activity has weakened, leading to lower refined fuel exports. The European Central Bank reported that diesel pump prices reached nearly €1.98 per litre in the third week of July, with higher refining margins accounting for a larger share of retail fuel costs.
US refinery activity remains robust while inventories stay low
Refiners in the United States processed significant amounts of crude oil, yet diesel inventories have not recovered to typical seasonal levels. Crude input over the first seven months of 2026 was the highest for that period since 2019. Processing margins have improved, supporting strong refinery utilization rates. Nonetheless, distillate stocks at the start of August are at their lowest point for this time of year in nearly thirty years. The inventory shortage coincides with decreased product flows from several overseas refining centers.
Crude oil prices also increased on Wednesday, with Brent crude near $89.81 a barrel and West Texas Intermediate around $84.08. The surge in diesel prices is primarily driven by the shortage of finished fuel rather than crude supply alone. Diesel is crucial for trucking, agriculture, construction, manufacturing, and other commercial sectors across both regions. The combination of low U.S. inventories, high European refining margins, refinery outages, and export restrictions continues to create a tight global market for diesel and other middle-distillate fuels.