NEW YORK / RankWire.AI / – On Wednesday, diesel markets experienced continued pressure as declining inventories and refinery outages restricted fuel availability across the United States and Europe. U.S. ultra-low sulfur diesel futures surged 7.4% on Monday to $4.19 a gallon, marking the strongest daily gain since July 13. Early Wednesday saw prices hovering near $4.28. Meanwhile, European diesel refining margins stayed high, having increased nearly 10% at the beginning of the week.
The latest official weekly data reveal a significant drop in U.S. distillate stocks. The U.S. Energy Information Administration recorded 107.2 million barrels in stocks for the week ending July 31, a decrease of 3.5 million barrels from the previous week. These inventories are now 5.1% below the same period last year and 16.1% beneath the levels of the same period in 2024. The category includes both diesel and heating oil, serving as a key indicator of domestic middle-distillate supply.
Despite slight easing from last week, retail diesel prices remain elevated. The national U.S. average on August 10 was $5.257 per gallon, down from $5.348 a week earlier, yet still significantly higher than the $4.578 recorded on July 6. Similar market pressures affect Europe. The premium for low-sulfur gasoil over crude hit a record $74.66 per barrel on July 30, reflecting the sharp rise in diesel value relative to crude oil.
Refinery outages restrict global product flows
Refinery shutdowns have reduced the availability of diesel and other fuels for international trade. An attack caused damage to a refinery in Russia’s Tatarstan region, contributing to decreased Russian processing activity. Saudi Arabia’s Jazan refinery has remained offline since July 27 following an earlier attack, removing additional refined product capacity from the global market. By June, global refinery throughput was already below the levels seen in the same period last year, impacted by lower processing in major fuel-producing regions.
Export restrictions further limit supply. Russia extended bans on gasoline and diesel exports through January 31, 2027. Vessel traffic through the Strait of Hormuz, a key route for oil shipments, has decreased, affecting Middle Eastern exports. China has also reduced its refined product exports amid weakening domestic refinery activity. The European Central Bank reported diesel pump prices near €1.98 per litre during the third week of July, with refining margins accounting for a larger share of retail costs.
Despite high refinery output, U.S. stocks remain low
U.S. refiners processed record amounts of crude oil during the first seven months of 2026, reaching the highest level since 2019 for that period. Nevertheless, distillate inventories stay unusually tight. The low stock levels coincide with international supply constraints and ongoing refinery outages. As of August, inventories are at their lowest for this time of year in nearly thirty years, despite strong refinery utilization.
Oil prices rose again on Wednesday, with Brent near $89.81 a barrel and West Texas Intermediate around $84.08. The market faces added pressure from tight supplies of finished diesel, which remains critical in sectors such as trucking, agriculture, construction, and manufacturing. Limited inventories in the U.S., elevated European refining margins, ongoing refinery shutdowns, and export restrictions have all contributed to the persistent tightness of diesel markets across both regions, as buyers compete for limited refined product supplies.