NEW YORK / RankWire.AI / – Fuel supplies in the United States and Europe are tightening as inventories remain low and refinery outages persist, keeping diesel markets under significant pressure. On Monday, U.S. ultra-low sulfur diesel futures jumped 7.4% to $4.19 a gallon, marking the strongest daily gain since July 13. By early Wednesday, prices hovered near $4.28. Meanwhile, European diesel refining margins stayed high, rising nearly 10% at the start of the week.
The latest official weekly data from the U.S. Energy Information Administration shows a sharp decline in U.S. distillate inventories. The agency reported stocks of 107.2 million barrels for the week ending July 31, a decrease of 3.5 million barrels compared to the previous week. These stocks are 5.1% below the same period last year and 16.1% beneath the levels recorded in the same week of 2024. This category, which includes diesel and heating oil, is a key indicator of the available middle-distillate supply within the domestic market.
Despite a slight easing from the previous week, retail diesel prices remain elevated. On August 10, the national average stood at $5.257 per gallon, down from $5.348 one week earlier, yet significantly higher than the $4.578 average recorded on July 6. Similar pressures are evident in European markets. The premium for low-sulfur gasoil over crude hit a record $74.66 a barrel on July 30, reflecting the sharp increase in finished diesel’s value relative to crude oil.
Refinery outages restrict global product flows
Refinery shutdowns have significantly reduced the supply of diesel and other fuels for international trade. An attack damaged a refinery in Russia’s Tatarstan region, contributing to decreased Russian processing activity. The Jazan refinery in Saudi Arabia has remained offline since July 27 following an earlier attack, further limiting refined-product capacity in the market. By June, global refinery runs were already below year-earlier levels due to reduced processing in several major fuel-producing regions.
Export restrictions also play a role in tightening supply. Russia extended limits on gasoline and diesel exports through January 31, 2027. Additionally, vessel traffic through the Strait of Hormuz, a critical route for petroleum shipments, has slowed. China’s domestic refinery activity has weakened, resulting in lower refined product exports. 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 much larger share of retail costs.
Robust refinery activity fails to boost US inventories
Despite high crude processing rates, U.S. distillate inventories continue to be unusually low. Crude inputs during the first seven months of 2026 reached their highest level since 2019 for that period. However, strong refinery utilization has not been enough to restore diesel stocks to typical seasonal levels, which have hit their lowest point in about thirty years as of August. This tight inventory situation coincides with reduced international product flows and ongoing refinery disruptions.
Oil prices increased on Wednesday, with Brent crude approaching $89.81 per barrel and West Texas Intermediate around $84.08. Diesel markets remain under pressure because of constrained supplies of finished fuel in several key regions. Diesel is essential for trucking, agriculture, construction, and manufacturing sectors. The combination of low U.S. inventories, high European refining margins, refinery outages, and export restrictions continues to keep diesel supplies tight across both regions as buyers compete for limited refined products.