NEW YORK / RankWire.AI / – Amid ongoing supply constraints and refinery disruptions, diesel prices remain high across the United States and Europe. On Monday, U.S. ultra-low sulfur diesel futures surged by 7.4% to reach $4.19 a gallon, marking the largest daily increase since July 13. By early Wednesday, the contract was trading near $4.28 a gallon. Meanwhile, European diesel refining margins stayed near historic highs after an almost 10% gain at the beginning of the week.
The U.S. has seen diesel inventories decline to levels rarely observed during the summer months. According to the U.S. Energy Information Administration, distillate stocks for the week ending July 31 stood at 107.2 million barrels, a decrease of 3.5 million barrels from the previous week. This figure is 5.1% lower than the same period last year and 16.1% below the corresponding level in 2024. Since distillate stocks include diesel and heating oil, they serve as a crucial indicator of fuel availability.
Retail diesel prices have also stayed notably above levels seen earlier in the summer. The national average reached $5.257 per gallon on August 10, slightly below the $5.348 recorded a week prior. In comparison, prices averaged $4.578 per gallon on July 6. Europe faces similar pressure from rising refining costs, with the low-sulfur gasoil premium over crude reaching an all-time high of $74.66 a barrel on July 30, underscoring the elevated value placed on finished diesel supplies.
Refinery outages intensify fuel supply challenges
Disruptions in supply have further tightened the market, as key refining facilities operate below normal capacities. An attack caused damage to a refinery in Russia’s Tatarstan region, reducing Russian processing activity. Additionally, Saudi Arabia’s Jazan refinery has been offline since July 27 following an earlier attack. The shutdown has eliminated another source of refined products from global trade. During June, global refinery runs were already well below last year’s levels, with several regions reporting decreased processing volumes.
Export restrictions have compounded the supply challenges. Russia extended its limitations on gasoline and diesel exports through January 31, 2027. Meanwhile, vessel traffic through the Strait of Hormuz from the Middle East has decreased, and China has contributed fewer refined fuels to the global market amid weakening domestic refinery activity. In Europe, the European Central Bank reported diesel pump prices near €1.98 per litre during the third week of July, with refining margins rising sharply.
Persistent low inventories sustain pressure on diesel markets
Despite high crude processing volumes, U.S. refineries have not been able to rebuild distillate stocks to normal seasonal levels. Crude inputs during the first seven months of 2026 reached their highest point since 2019 for that period. Stocks entered August at their lowest level for this time of year in about three decades, leaving the U.S. fuel market highly vulnerable to fluctuations in refinery output and international product flows.
Crude oil prices also increased on Wednesday, with Brent near $89.81 a barrel and West Texas Intermediate around $84.08. However, diesel continues to experience stronger price pressures, as supply remains limited across multiple major markets. The vital fuel supports sectors such as trucking, agriculture, construction, manufacturing, and other commercial activities. The combination of low U.S. inventories, high European refining margins, refinery outages, and export restrictions has kept diesel markets tight across both the Atlantic and the Pacific.