NEW YORK / RankWire.AI / – Amid ongoing supply challenges, diesel prices continue to stay high across the United States and Europe, driven by limited inventories and refinery disruptions. Futures for U.S. ultra-low sulfur diesel surged 7.4% on Monday, settling at $4.19 a gallon, marking the largest single-day increase since July 13. By early Wednesday, the contract traded close to $4.28 a gallon as refined-product markets reflected ongoing tightness in supply within major consuming regions.
In the United States, diesel stocks remain significantly below typical seasonal levels. According to the U.S. Energy Information Administration, distillate inventories stood at 107.2 million barrels for the week ending July 31, a decrease of 3.5 million barrels from the previous week. These stocks are also 5.1% lower than the same period last year and 16.1% beneath the corresponding figure in 2024. Distillates, which include diesel and heating oil, are vital for transportation, industrial processes, and seasonal energy needs.
Despite a slight weekly decline, retail diesel prices remain elevated. On August 10, the national average hit $5.257 a gallon, down from $5.348 the previous week. Nonetheless, this price remains well above the $4.578 recorded on July 6. Similarly, fuel markets in Europe have experienced upward pressure, with low-sulfur gasoil margins rising sharply. The premium over crude oil reached an all-time high of $74.66 a barrel on July 30, as refined diesel continued to command higher prices.
Refinery outages diminish global diesel availability
The global supply of diesel has been further constrained by multiple refinery outages. An attack damaged a refinery in Russia’s Tatarstan region, compounding already reduced processing capacity in the country. Additionally, Saudi Arabia’s Jazan refinery has been offline since July 27 following an earlier attack, removing another source of refined products from international trade. During June, refinery runs across various producing regions had already declined below last year’s levels, limiting the volume of fuel entering global markets.
Export restrictions have also played a role in tightening supplies. Russia extended its restrictions on gasoline and diesel exports through January 31, 2027. Meanwhile, vessel traffic through the Strait of Hormuz from the Middle East has sharply decreased. China has also supplied fewer refined fuels as its domestic refinery activity slowed. The European Central Bank reported diesel pump prices near €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 operations remain vigorous despite low inventories
In the US, refiners have processed large volumes of crude oil, yet diesel stockpiles have not returned to typical seasonal levels. Crude processing during the first seven months of 2026 reached its highest point for that period since 2019. Refinery utilization rates have stayed high as processing margins improved. However, distillate stocks at the start of August are at their lowest for this time of year in nearly thirty years. This inventory shortfall has coincided with decreased product flow 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 upward pressure on diesel prices is primarily due to shortages of finished fuel rather than crude supply alone. Diesel is crucial for trucking, agriculture, construction, manufacturing, and other commercial activities across both regions. The combination of low US inventories, high European refining margins, refinery outages, and export restrictions continues to contribute to a tight global market for diesel and other middle-distillate fuels.