Diesel crack spreads have surged to record levels above $100 per barrel in both the U.S. and Europe, underscoring a physical market far tighter than Brent crude futures would indicate.
According to energy analytics firm Vortexa, Middle East and Russian diesel exports have fallen by more than 50% in recent weeks, dropping to 1.6 million barrels per day from around 3.3 million bpd. The decline follows Russia’s ban on diesel exports amid Ukrainian drone strikes on refineries and shipping disruptions in the Middle East linked to the Iran conflict. Regional conflicts have also constrained product flows through the Strait of Hormuz, which remains largely closed to tanker traffic compared with pre-war levels.
Refineries in the U.S. and Europe are operating near full capacity to offset lost supply, delaying planned maintenance to capitalize on record refining margins. However, the relief is partial. Middle distillate inventories in the U.S. are now 12% below the five-year seasonal average, while global stockpiles continue to decline. The analysis suggests the market remains vulnerable to further disruptions, such as an unexpected refinery outage or hurricane, which could push prices to new highs.
The diesel crack spread in the U.S. reached a historic $102 per barrel on Monday before easing slightly to around $100 per barrel on Tuesday. The premium over crude prices has rarely exceeded triple digits in prior years, reflecting the severity of the supply squeeze. Rohit Rathod, senior oil market analyst at Vortexa, noted that refining margins globally are near record levels, driven largely by the severe and worsening diesel shortage.
Diesel prices have already surged, with the U.S. average retail price at $5.47 per gallon—8% higher than a month ago and more than 40% above the year-ago average of $3.69. Demand is expected to rise further in the coming weeks as harvest season begins, holiday shipping ramps up, and households prepare for winter heating needs. Unlike gasoline, diesel demand is less price-sensitive, making it a critical input for industrial activity.
The analysis warns that diesel prices could climb further this autumn, adding to inflationary pressures and straining consumer budgets ahead of the U.S. midterm elections in early November. Robert Campbell of Energy Aspects emphasized the fuel’s role as the "lifeblood of the industrial economy," noting that demand cannot be easily curtailed despite high prices.
