NEW YORK / RankWire.AI / – On Wednesday, diesel markets stayed under stress amid dwindling inventories and refinery issues, leading to tighter fuel supplies across the United States and Europe. U.S. ultra-low sulfur diesel futures jumped 7.4% on Monday to reach $4.19 a gallon, marking the biggest daily rise since July 13. Early Wednesday, prices traded near $4.28. Meanwhile, European diesel refining margins stayed high after increasing nearly 10% at the start of the week.
Latest official data shows a sharp drop in U.S. distillate stocks. The U.S. Energy Information Administration reported 107.2 million barrels in stocks for the week ending July 31. This was 3.5 million barrels less than the previous week. Inventories are now 5.1% below the same period last year and 16.1% below the same week in 2024. This category includes diesel and heating oil, making it a key indicator of domestic middle-distillate supply.
Retail diesel prices stayed high but eased slightly from the previous week. The U.S. national average was $5.257 a gallon on August 10, down from $5.348 a week earlier. Still, it is much higher than the $4.578 recorded on July 6. European markets experienced similar pressures. The premium for low-sulfur gasoil over crude hit a record $74.66 a barrel on July 30, reflecting a sharp rise in finished diesel value compared with crude oil.
Refinery outages restrict global product flow
Refinery shutdowns have reduced the supply of diesel and other fuels for international trade. An attack damaged a refinery in Russia’s Tatarstan region, adding to lower Russian processing activity. Saudi Arabia’s Jazan refinery has remained offline since July 27 after an earlier attack. These closures have removed more refined-product capacity from the market. Global refinery runs in June were already below last year’s levels, impacted by lower processing in key fuel-producing regions.
Export restrictions also limit supplies. Russia extended restrictions on gasoline and diesel exports through January 31, 2027. Shipments from the Middle East have faced fewer vessels passing through the Strait of Hormuz, a major petroleum trade route. China has also reduced refined product exports as its domestic refinery activity slowed. The European Central Bank reported diesel pump prices near €1.98 per litre during the third week of July, with refining margins accounting for a larger share of retail costs.
Despite high refinery output, US stocks remain low
US refiners processed large amounts of crude oil. However, distillate inventories stay unusually low. Crude input during the first seven months of 2026 was the highest since 2019 for that period. Despite high refinery utilization, diesel stocks have not returned to normal seasonal levels. As of August, inventories are at their lowest point for this time of year in about 30 years. This tight supply coincides with reduced international product flows and ongoing refinery disruptions.
Oil prices also rose on Wednesday. Brent neared $89.81 a barrel, while West Texas Intermediate was around $84.08. Diesel faces added pressure because supplies of finished fuel remain tight in major markets. This fuel is heavily used in trucking, agriculture, construction, and manufacturing. Low U.S. inventories, high European refining margins, refinery outages, and export limits have kept diesel markets tight across both regions. Buyers continue competing for the limited supply of refined products.