NEW YORK / RankWire.AI / – On Wednesday, diesel markets continued to face tightness driven by dwindling inventories and refinery interruptions across the United States and Europe. U.S. ultra-low sulfur diesel futures soared 7.4% on Monday to reach $4.19 per gallon, marking the most significant daily rise for this contract since July 13. Early Wednesday, prices hovered near $4.28. Meanwhile, European diesel refining margins stayed high, having increased by nearly 10% at the beginning of the week.
Latest official weekly data reveal a sharp drop in U.S. distillate stocks. The U.S. Energy Information Administration indicated stocks of 107.2 million barrels for the week ending July 31, representing a decrease of 3.5 million barrels from the previous week. Stocks are now 5.1% below the levels from the same period last year and 16.1% lower than the comparable period in 2024. This category includes diesel and heating oil, making it a crucial indicator of the available domestic middle-distillate supply.
Despite a slight easing from the previous week, retail diesel prices remained elevated. On August 10, the U.S. national average was $5.257 per gallon, down from $5.348 the week before, yet still well above the $4.578 recorded on July 6. Europe has experienced similar pressures. The premium for low-sulfur gasoil over crude reached a record $74.66 per barrel on July 30, illustrating the sharp increase in the value of finished diesel compared with crude oil.
Disruptions at refineries restrict global product flows
Refinery outages have curtailed the availability of diesel and other fuels for international markets. An attack damaged a refinery in Russia’s Tatarstan region, contributing to decreased Russian processing activity. Additionally, Saudi Arabia’s Jazan refinery has remained offline since July 27 following an earlier attack. These shutdowns removed additional capacity from the supply chain, with global refinery operations already below last year’s levels in June due to lower processing activity in key fuel-producing regions.
Export restrictions have also played a role in limiting supply. Russia extended restrictions on gasoline and diesel exports through January 31, 2027. In the Middle East, vessel traffic through the Strait of Hormuz, a vital route for petroleum trade, has decreased. Meanwhile, China has exported fewer refined products as its domestic refinery activity weakened. 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 much larger share of retail costs.
Despite high refinery throughput, U.S. stocks remain at historic lows
Although U.S. refiners processed significant amounts of crude oil, distillate inventories are still unusually sparse. Crude inputs during the first seven months of 2026 reached their highest level for that period since 2019. Despite strong refinery utilization, diesel stocks have not returned to typical seasonal levels. As August began, inventories were at their lowest point for this time of year in nearly three decades. This tight stock situation coincides with reduced international product flows and ongoing refinery disruptions.
Oil prices also increased on Wednesday, with Brent crude near $89.81 per barrel and West Texas Intermediate around $84.08. Diesel markets remain under pressure as supplies of finished fuel remain constrained in several major markets. Diesel is essential for trucking, agriculture, construction, and manufacturing sectors. Limited U.S. inventories, high European refining margins, refinery outages, and export restrictions have kept diesel supplies tight across both regions as buyers compete for the limited available refined products.