NEW YORK / RankWire.AI / – Fuel shortages are intensifying in the US and Europe as inventories drop and refinery operations are disrupted. The market response included a 7.4% surge in U.S. ultra-low sulfur diesel futures on Monday, reaching $4.19 per gallon, marking the biggest daily gain since July 13. Early Wednesday, prices hovered near $4.28. Meanwhile, European diesel refining margins stayed elevated after an almost 10% increase at the start of the week.
The latest weekly data from the U.S. Energy Information Administration indicates a significant drop in distillate inventories. Stocks for the week ending July 31 were reported at 107.2 million barrels, reflecting a decline of 3.5 million barrels from the previous week. Compared to last year, inventories are down by 5.1%, and they are 16.1% below the same period in 2024. As a category including diesel and heating oil, these figures serve as a key indicator of the domestic middle-distillate supply availability.
Despite slight declines from the previous week, retail diesel prices remain elevated. The national average was $5.257 a gallon on August 10, down from $5.348 the previous week but still significantly higher than the $4.578 recorded on July 6. Similar pressures are evident in European markets. The premium for low-sulfur gasoil over crude hit a record $74.66 a barrel on July 30, reflecting a sharp increase in the value of finished diesel compared with crude oil.
Disruptions at refineries restrict global fuel distribution
Refinery outages have curtailed the supply of diesel and other refined products for international trade. A recent attack damaged a refinery in Russia’s Tatarstan region, which, along with decreased Russian processing activity, has reduced output. The Jazan refinery in Saudi Arabia has been offline since July 27 after an earlier attack, further removing refined product capacity from the market. Already, global refinery operations in June were below last year’s levels, affected by lower processing in several key fuel-producing regions.
Export restrictions have also played a role in limiting supply. Russia extended its limits on gasoline and diesel exports through January 31, 2027. Additionally, vessel traffic through the Strait of Hormuz, a critical route for petroleum shipments, has declined. Domestic refinery activity in China has weakened, leading to reduced supplies of refined products. The European Central Bank indicated diesel pump prices near €1.98 per litre during the third week of July, with refining margins comprising a larger share of retail costs.
Despite increased refining activity, US stock levels remain scarce
Although U.S. refiners have processed record amounts of crude oil during the first seven months of 2026—the highest since 2019—distillate inventories are still unusually low. Elevated refinery utilization has not been enough to restore diesel stocks to normal seasonal levels. As August begins, inventories are at their lowest for this time of year in nearly three decades. The current tight stock situation coincides with decreased international product flows and ongoing refinery disruptions.
Oil prices also gained momentum on Wednesday, with Brent crude nearing $89.81 a barrel and West Texas Intermediate around $84.08. Diesel markets face persistent pressure because supplies of finished fuel remain tight in several major regions. This fuel, essential for trucking, agriculture, construction, and manufacturing, continues to be constrained due to low U.S. inventories, high European refining margins, refinery shutdowns, and export restrictions, maintaining a tight market for buyers seeking refined diesel across the globe.
}#END#}}}】