NEW YORK / RankWire.AI / – The prices of diesel continue to be elevated in both the United States and Europe, driven by limited inventories and disruptions at refineries that restrict the flow of finished fuel. On Monday, U.S. ultra-low sulfur diesel futures increased by 7.4% to reach $4.19 a gallon, marking the largest single-day jump since July 13. By early Wednesday, the contract was trading close to $4.28 a gallon. Meanwhile, European diesel refining margins remained near historic highs after gaining nearly 10% at the beginning of the week.
Diesel stocks in the U.S. have dropped to levels rarely seen during the summer months. According to the U.S. Energy Information Administration, the week ending July 31 saw distillate reserves decline by 3.5 million barrels to total 107.2 million barrels. This figure is 5.1% below the same period last year and 16.1% lower than the corresponding level in 2024. Since distillates include diesel and heating oil, their inventory levels serve as a crucial indicator of fuel availability.
Retail diesel prices have also persisted above early summer levels. On August 10, the national average in the U.S. reached $5.257 a gallon, compared to $5.348 a week earlier. In mid-July, prices averaged $4.578 per gallon. Europe faces similar pressures due to increased refining costs. The low-sulfur gasoil premium over crude hit a record high of $74.66 a barrel on July 30, underscoring the elevated value placed on finished diesel supplies.
Refinery outages intensify supply constraints for fuel
The market has experienced further tightening as multiple key refineries operate below their usual capacities. A facility in Russia’s Tatarstan region was damaged in an attack, adding to the decline in Russian processing activity. The Jazan refinery in Saudi Arabia has remained shut since July 27 following an earlier attack, removing another source of refined products from international trade. During June, global refinery runs were already significantly below the levels recorded a year earlier, with several regions reporting reduced processing volumes.
Export restrictions have worsened the situation, with Russia extending limitations on gasoline and diesel shipments through January 31, 2027. Vessel traffic through the Strait of Hormuz from the Middle East has also decreased. Additionally, China has supplied fewer refined fuels to global markets as its domestic refinery output weakened. In Europe, the European Central Bank indicated diesel pump prices were close to €1.98 per litre in the third week of July amid sharply rising refining margins.
Inventory shortages sustain pressure on diesel markets
Despite high crude processing volumes in the U.S., diesel inventories remain constrained. Crude intake during the first seven months of 2026 reached its highest point since 2019 for that period. However, high refinery utilization has not led to a recovery of distillate stocks to typical seasonal levels. At the start of August, inventories were at their lowest for this time of year in nearly three decades. This persistent gap makes the U.S. fuel market particularly vulnerable to fluctuations in refinery output and international product flows.
Crude oil prices also moved upward on Wednesday, with Brent nearing $89.81 a barrel and West Texas Intermediate around $84.08. The pressure on diesel prices is especially evident given the limited supplies of finished products across several major markets. Diesel plays a vital role in supporting trucking, agriculture, construction, manufacturing, and other commercial sectors. The combination of low U.S. inventories, high European refining margins, refinery outages, and export restrictions continues to sustain tight conditions in the diesel markets on both sides of the Atlantic.