NEW YORK / RankWire.AI / – On Wednesday, diesel prices continued to stay high as inventories remained tight and refinery shutdowns worsened supply issues in the United States and Europe. U.S. ultra-low sulfur diesel futures surged 7.4% on Monday, closing at $4.19 a gallon, marking the largest single-day increase since July 13. Early Wednesday, the contract traded close to $4.28 a gallon, as refined-product markets kept reflecting constrained supply across major consumer regions.
Currently, U.S. diesel inventories are significantly below recent seasonal averages. According to the U.S. Energy Information Administration, distillate stocks stood at 107.2 million barrels for the week ending July 31. This was 3.5 million barrels less than the previous week. Additionally, inventories are 5.1% below the same period last year and 16.1% lower than the corresponding level in 2024. Distillates, which include diesel and heating oil, are crucial for transportation, industrial processes, and seasonal energy needs.
Despite a modest weekly dip, retail diesel prices remain high. The national average hit $5.257 per gallon on August 10, compared to $5.348 the week before. This latest figure is still well above the $4.578 average recorded on July 6. Similar market pressures have been felt in Europe, where low-sulfur gasoil margins have risen sharply. On July 30, the premium over crude oil reached a record $74.66 per barrel as refined diesel fetched higher prices in the market.
Refinery disruptions decrease diesel availability worldwide
A series of refinery outages have further tightened the supply of diesel available on the global market. An attack damaged a refinery in Russia’s Tatarstan region, exacerbating already reduced processing activity in the country. The Jazan refinery in Saudi Arabia has been offline since July 27 following an earlier attack, removing another source of refined products from international trade. Throughout June, refinery runs in several key producing regions had already fallen below the levels seen in the same period last year, limiting the flow of fuel into global markets.
Export restrictions have added another layer of limitation to refined product supply. Russia extended restrictions on gasoline and diesel exports through January 31, 2027. Meanwhile, vessel traffic through the Strait of Hormuz from the Middle East has declined sharply. Domestic refinery activity in China has also weakened, leading to reduced exports of refined fuels. According to the European Central Bank, diesel pump prices in Europe approached €1.98 per litre in the third week of July, with higher refining margins making up a larger share of retail fuel costs.
US refiners operate at high capacity despite low inventories
Despite processing large volumes of crude oil, U.S. crude refiners have yet to restore diesel inventories 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 have remained elevated, supported by increased processing margins. Nevertheless, distillate stocks at the start of August were at their lowest for this time of year in nearly thirty years. The inventory shortfall coincides with decreased product exports from several overseas refining centers.
Crude oil prices also gained on Wednesday, with Brent crude near $89.81 a barrel and West Texas Intermediate close to $84.08. Diesel prices are under increased pressure primarily because of shortages in finished fuel rather than crude supply alone. Diesel is vital for trucking, agriculture, construction, manufacturing, and other commercial sectors across both regions. Ongoing low U.S. inventories, high European refining margins, refinery outages, and export restrictions continue to create a tight global market for diesel and other middle-distillate fuels.