Global Diesel Supply Set to Remain Tight Through Winter

Senior industry executives warned that the world’s diesel market will stay constrained as the season approaches. They cite a shortfall in spare refining capacity, ongoing export bans, and the build-up to peak winter demand as the main drivers of the shortage.

Reuters

The war in Ukraine and the conflict in Iran have limited refinery output in Russia and the Middle East. Those disruptions, combined with Russia’s ban on diesel exports, have cut product availability for Europe, the United States and Asia. Executives note that while crude supplies remain relatively abundant, the ability to process that crude into diesel is lagging.

Reuters

• The market is missing roughly 2 million barrels per day (bpd) of diesel from Russia and nearly 2 million bpd from the Middle East.

Reuters

• The Middle East continues to export about 9 million bpd of crude but only 1 million bpd of refined products.

Reuters

• U.S. diesel prices have surged to record highs, and the crack spread—a key profitability metric—reached an intraday peak of $108.02 per barrel.

Reuters

• Vitol projects that high prices and limited fuel supplies will cut global oil demand by about 1.5 million bpd in 2026 versus 2025.

Reuters

• China’s crude-import gap is projected at 5 million to 6 million bpd between 2025 and 2026, a level executives deem unsustainable.

Reuters

Vitol CEO Russell Hardy told participants at the APPEC conference that the shortage stems from the combined loss of product capacity in Russia and the Middle East. He added that crude supplies are in a better position than refined products, noting the disparity between crude and product exports from the Middle East. Mark Senn, senior vice-president of global trading at Phillips 66, said most U.S. refineries are already operating at full capacity, warning that the approaching winter will likely keep diesel markets tight.

Reuters

• “There's really a shortage of products because we're missing 2 million barrels a day from Russia, and we're missing nearly 2 million barrels a day from the Middle East,” — Vitol CEO Russell Hardy

Reuters