NEW YORK / RankWire.AI / – On Wednesday, diesel markets stayed under significant strain as reduced inventories and refinery outages limited fuel availability across the United States and Europe. U.S. ultra-low sulfur diesel futures climbed 7.4% on Monday to reach $4.19 per gallon, marking the strongest single-day rise since July 13. Early Wednesday, prices hovered around $4.28. Meanwhile, European diesel refining margins also stayed high after gaining nearly 10% at the beginning of the week.
Latest official weekly data reveal a sharp decline in U.S. distillate stocks. The U.S. Energy Information Administration reported inventories of 107.2 million barrels for the week ending July 31, representing a decrease of 3.5 million barrels from the previous week. These stocks are now 5.1% below the levels recorded a year earlier and 16.1% below the corresponding period in 2024. This category includes diesel and heating oil, making it a key indicator of domestic middle-distillate supply levels.
Despite a slight easing from the previous week, retail diesel prices remain elevated. On August 10, the average U.S. price was $5.257 a gallon, down from $5.348 a week earlier, but still well above the $4.578 recorded on July 6. Similar pressures are evident in European markets, where the premium for low-sulfur gasoil over crude hit a record $74.66 a barrel on July 30, highlighting the surge in diesel’s value relative to crude oil.
Refinery outages restrict global product movement
Reduced refinery activity has led to diminished supplies of diesel and other fuels for international markets. A recent attack damaged a refinery in Russia’s Tatarstan region, contributing to lower processing rates in Russia. The Jazan refinery in Saudi Arabia has remained offline since July 27 following an earlier attack, removing additional capacity from the market. As of June, global refinery throughput was already below levels from the same period in 2024, reflecting lower processing activity in several major fuel-producing regions.
Export restrictions have further constrained supply. Russia extended limits on gasoline and diesel exports through January 31, 2027. Vessel traffic through the Strait of Hormuz, a vital route for oil trade, has decreased, impacting shipments from the Middle East. Additionally, China has reduced its refined product exports amid weakening domestic refinery output. The European Central Bank indicated diesel pump prices near €1.98 per litre during the third week of July, with refining margins accounting for a much larger share of retail costs.
Despite elevated refining activity, U.S. stocks remain depleted
Although U.S. refiners processed record amounts of crude during the first seven months of 2026—the highest for that period since 2019—distillate inventories are still unusually low. Despite high refinery utilization, diesel stocks have not returned to typical seasonal levels and entered August at their lowest point in about thirty years. This tight supply situation coincides with diminished international product flows and ongoing refinery outages.
Meanwhile, oil prices climbed Wednesday, with Brent crude nearing $89.81 a barrel and West Texas Intermediate around $84.08. Diesel remains under significant pressure as supplies of finished fuel continue to be limited in several major markets. Widely used in trucking, agriculture, construction, and manufacturing, diesel markets across both the US and Europe remain tight due to low inventories, high refining margins, refinery shutdowns, and export restrictions, as buyers scramble for limited supplies of refined product.