NEW YORK / RankWire.AI / – On Wednesday, diesel prices continued to stay high as restricted supplies of refined products kept upward pressure on fuel markets in the United States and Europe. Futures for U.S. ultra-low sulfur diesel surged 7.4% on Monday, settling at $4.19 a gallon, marking the largest daily increase for the contract since July 13. Early Wednesday trading positioned the futures around $4.28 per gallon, while refining margins for European diesel persisted at historically elevated levels following a nearly 10% rise on Monday.
The average retail price for diesel in the U.S. was $5.257 a gallon on August 10, slightly down from $5.348 recorded a week earlier. Nonetheless, prices remained significantly above the $4.578 average seen on July 6. According to the U.S. Energy Information Administration, distillate inventories decreased by 3.5 million barrels during the week ending July 31, bringing stocks to 107.2 million barrels, down from 110.6 million a week prior. This figure represents a 5.1% decline compared to the same period last year and a 16.1% drop from two years ago.
European countries have also experienced exceptionally high costs in converting crude oil into diesel. The premium for European low-sulfur gasoil over crude reached a record $74.66 a barrel on July 30. Additionally, diesel margins in Europe increased nearly 10% by August 10. The European Central Bank reported pump prices around €1.98 per litre during the third week of July, with its analysis indicating that refining margins contributed approximately €0.35 per litre during the first three weeks of that month — a substantial rise from earlier levels.
Refinery disruptions decrease diesel availability
Unforeseen shutdowns at refineries have further restricted fuel supplies from an already tight international market. A strike targeted a refinery in Russia’s Tatarstan region, compounding the reduction in Russian refining activity. Meanwhile, Saudi Arabia’s Jazan refinery has remained offline since July 27 following an earlier attack. These disruptions influence regions that traditionally supply large volumes of refined petroleum products globally. In June, global refinery throughput had already fallen well below the levels of the previous year, as several major centers operated with decreased capacity.
Russia extended restrictions on diesel and gasoline exports through January 31, 2027, limiting the available supply for international trade. Additionally, shipments from the Middle East have faced further delays due to sharply reduced vessel movements through the Strait of Hormuz. Traffic through this strategic waterway has dropped significantly compared to pre-conflict levels. Furthermore, diminished refining activity in China has contributed to a decrease in petroleum product supplies entering global markets during a period of strong refining margins.
High refinery activity cannot prevent tightening of diesel supplies
Despite high levels of crude processing in the United States, fuel inventories remain at low levels. Data from federal agencies show that crude inputs to U.S. refineries during the first seven months of 2026 reached their highest point since 2019. Refinery utilization rates stay elevated, supported by strong margins that encourage extensive processing. Nonetheless, distillate inventories at the beginning of August marked their lowest for this time of year in approximately thirty years. Both diesel and heating oil are included in the distillate inventory category tracked weekly in U.S. petroleum statistics.
Crude oil prices also increased on Wednesday, with Brent crude approaching $89.81 a barrel and U.S. West Texas Intermediate near $84.08. The diesel market experiences heightened pressure due to limited supplies of finished fuel, which has been driven by refinery disruptions and export restrictions. As a vital fuel for trucking, agriculture, construction, manufacturing, and other commercial sectors, diesel’s tight supply has been further exacerbated by low U.S. inventories, record European refining margins, and reduced international refinery activity, leading to a supply squeeze across both sides of the Atlantic.