NEW YORK / RankWire.AI / – On Wednesday, diesel prices stayed high amid strained supplies caused by limited inventories and refinery outages in the United States and Europe. U.S. ultra-low sulfur diesel futures surged 7.4% on Monday, closing at $4.19 per gallon, marking the largest single-day increase since July 13. Early Wednesday, the contract traded near $4.28 a gallon as markets for refined products continued to show signs of constrained supply across key consumption regions.
U.S. diesel stockpiles remain significantly below recent seasonal averages. The U.S. Energy Information Administration reported distillate stocks totaling 107.2 million barrels for the week ending July 31. This figure was 3.5 million barrels lower than the previous week, and inventories were 5.1% less than the same period last year, as well as 16.1% below the comparable level in 2024. Distillates, which include diesel and heating oil, are crucial for transportation, industry, and seasonal energy needs.
Despite a slight weekly decline, retail diesel prices remain elevated. The national average hit $5.257 a gallon on August 10, down from $5.348 a week earlier, but still well above the $4.578 recorded on July 6. Fuel markets in Europe have experienced similar pressures, with sharp increases in low-sulfur gasoil margins. The premium over crude hit a record of $74.66 a barrel on July 30, as finished diesel commanded higher values in the market.
Refinery disruptions diminish global diesel supply
The availability of diesel on the international market has been further curtailed by multiple refinery outages. Damage from an attack affected a refinery in Russia’s Tatarstan region, compounding reduced processing activity within the country. Additionally, Saudi Arabia’s Jazan refinery has remained offline since July 27 after an earlier attack, removing another source of refined products from global trade. Throughout June, refinery runs across various producing regions had already fallen below last year’s levels, limiting the volume of fuel entering international markets.
Export restrictions have added another layer of limitation to 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 has sharply decreased for shipments originating in the Middle East. China has also exported less refined fuel due to weakened domestic refinery activity. The European Central Bank reported diesel pump prices near €1.98 per litre in the third week of July, with higher refining margins contributing to increased retail fuel costs.
High US refinery activity persists despite low inventories
While American refineries have processed large quantities of crude oil, diesel inventories have not yet recovered to typical seasonal levels. Crude input during the first seven months of 2026 reached their highest point since 2019 for the same period. Refinery utilization rates remain high as processing margins have improved. Nevertheless, distillate stocks as of August are at their lowest for this time of year in nearly thirty years. This shortage coincides with reduced product imports from multiple overseas refining hubs.
Crude oil prices also increased on Wednesday, with Brent near $89.81 a barrel and West Texas Intermediate around $84.08. The pressure on diesel prices is more about shortages of finished fuel rather than crude supply alone. Diesel is vital for sectors like trucking, agriculture, construction, and manufacturing across both regions. Ongoing low U.S. inventories, high European refining margins, refinery outages, and export restrictions continue to keep the global diesel market tight and constrained.