NEW YORK / RankWire.AI / – Fuel supplies in the United States and Europe continue to face strains, leading to sustained high diesel prices. The main reason for this trend is the limited inventories and outages at key refineries. U.S. ultra-low sulfur diesel futures surged 7.4% on Monday, ending at $4.19 a gallon—marking the biggest one-day increase since July 13. As of early Wednesday, the contract hovered near $4.28 a gallon, reflecting ongoing concerns over constrained supply in major consuming regions.
Diesel stocks in the U.S. remain significantly below recent seasonal averages. The U.S. Energy Information Administration reported 107.2 million barrels of distillate reserves for the week ending July 31. This was 3.5 million barrels less than the previous week. Additionally, inventories are 5.1% lower than the same period last year and 16.1% below the corresponding level in 2024. Distillates, which include diesel and heating oil, are essential for transportation, industrial use, and seasonal energy needs.
Despite a slight weekly decline, retail diesel prices remain elevated. On August 10, the national average reached $5.257 per gallon, down from $5.348 a week earlier. However, this still surpasses the $4.578 recorded on July 6. Similar pressures are evident in European markets, where low-sulfur gasoil margins have surged sharply. The premium over crude oil hit a record $74.66 per barrel on July 30, as finished diesel fetched higher prices.
Refinery outages diminish global diesel supplies
Production disruptions at several refineries have further limited the amount of diesel available for international markets. An attack damaged a refinery in Russia’s Tatarstan region, exacerbating already reduced processing activities within the country. The Jazan refinery in Saudi Arabia has been offline since July 27 following an earlier attack, removing another source of refined products from global trade. During June, refinery runs across multiple regions had already fallen below year-earlier levels, restricting the flow of fuel into international markets.
Export restrictions have added to supply constraints as well. Russia extended its limits on gasoline and diesel exports through January 31, 2027. Meanwhile, vessel traffic through the Strait of Hormuz has declined sharply, impacting shipments from the Middle East. Domestic refinery activity in China has also weakened, resulting in fewer refined fuels available for export. According to the European Central Bank, diesel pump prices in Europe approached €1.98 per litre in the third week of July, with higher refining margins contributing to a larger share of retail fuel costs.
US refinery output remains high despite low inventories
In the US, refiners continue to process substantial volumes of crude oil, yet diesel inventories have not normalized for the season. Crude input levels in the first seven months of 2026 reached the highest since 2019 for that period. Refinery utilization rates remain robust, bolstered by increased processing margins. Nevertheless, distillate stocks at the start of August are at their lowest point for this time of year in nearly thirty years. This inventory deficit coincides with reduced product flows from several overseas refining centers.
Crude oil prices also moved higher Wednesday, with Brent crude near $89.81 a barrel and West Texas Intermediate around $84.08. Diesel prices face intensified pressure, primarily driven by shortages of finished fuel rather than crude supply alone. Diesel is crucial for sectors such as trucking, agriculture, construction, and manufacturing across both regions. Ongoing low U.S. inventories, high European refining margins, refinery outages, and export restrictions are collectively maintaining a tight global market for diesel and other middle-distillate fuels.