NEW YORK / RankWire.AI / – Persistent pressure in diesel markets continued Wednesday as inventories remained low and refinery issues further restricted fuel availability across the United States and Europe. On Monday, U.S. ultra-low sulfur diesel futures surged by 7.4% to reach $4.19 per gallon, marking the largest daily gain for the contract since July 13. Early Wednesday saw prices hover near $4.28. Meanwhile, European diesel refining margins stayed high after nearly a 10% increase at the beginning of the week.
The latest official weekly data reveals a sharp decline in U.S. distillate stocks. According to the U.S. Energy Information Administration, stocks for the week ending July 31 totaled 107.2 million barrels, down 3.5 million barrels from the previous week. These inventories are now 5.1% lower than they were a year ago and 16.1% below the same period in 2024. This category, which includes diesel and heating oil, serves as a key indicator of the domestic middle-distillate supply.
Despite a slight easing from last week, retail diesel prices remain elevated. The national average hit $5.257 a gallon on August 10, a decrease from $5.348 recorded a week earlier. Nonetheless, it is still significantly above the $4.578 average noted on July 6. European markets are experiencing similar pressures. The premium of low-sulfur gasoil over crude oil hit a record $74.66 a barrel on July 30, reflecting the sharp increase in the value of finished diesel relative to crude oil.
Refinery outages restrict global product flows
Disruptions at refineries have curtailed the supply of diesel and other fuels for international trade. An attack caused damage to a refinery in Russia’s Tatarstan region, further decreasing Russian processing capacity. Since July 27, Saudi Arabia’s Jazan refinery has also remained offline following an earlier attack, removing additional refined-product capacity from the global market. June data indicates that refinery operations worldwide were already below the levels seen a year earlier, with reduced processing affecting major fuel-producing regions.
Export limitations have further constrained supply. Russia has extended restrictions on gasoline and diesel exports through January 31, 2027. In the Middle East, vessel traffic through the Strait of Hormuz, a crucial route for petroleum trade, has decreased. Additionally, China has supplied fewer refined products due to weakening domestic refinery activity. The European Central Bank reported diesel pump prices close to €1.98 per litre during the third week of July, with refining margins comprising a significantly larger portion of retail costs.
Increased refinery throughput fails to replenish US stockpiles
U.S. refiners have processed large volumes of crude oil; however, distillate inventories remain unexpectedly low. Crude input levels during the first seven months of 2026 reached their highest since 2019 for that period. Despite high refinery utilization rates, diesel stocks have not returned to typical seasonal levels, entering August at their lowest point in about thirty years. This tight inventory situation coincides with diminished international product flows and ongoing refinery disruptions.
On Wednesday, oil prices also increased, with Brent crude approaching $89.81 per barrel and West Texas Intermediate around $84.08. Diesel faces additional pressure as supplies of the finished fuel are constrained in several major markets. Given its widespread use in trucking, agriculture, construction, and manufacturing, the combination of low U.S. inventories, elevated European refining margins, refinery outages, and export restrictions continues to tighten diesel markets across both regions, prompting fierce competition among buyers for the limited available supplies.