Diesel prices surge as refinery attacks squeeze global fuel supplies

The price of diesel — the fuel used by trucks, farmers, manufacturers and other major industries — has spiked in the US and Europe following a series of refinery disruptions that tightened supplies.

US ultra-low-sulfur diesel futures jumped 7.4% to $4.19 a gallon, the biggest one-day increase since July 13, while European diesel refining margins rose nearly 10%, Reuters reported.

Diesel prices have been rising faster than crude oil benchmarks as traders focus increasingly on shortages of refined products rather than crude itself.

In Europe, diesel refining margins — measured by the spread between the price of refined fuel and the cost of crude oil — rose by approximately 10%.

The latest pressure followed a Ukrainian attack on a refinery in Russia's Tatarstan region and renewed attacks by Yemen's Iran-aligned Houthis on Saudi Arabia's Jazan refinery, which has been offline since July 27.

The Saudi facility is now expected to resume operations around Aug. 30.

The disruptions come on top of the continuing fallout from the closure of the Strait of Hormuz, a critical energy shipping route whose disruption has constrained global flows of crude and refined petroleum products.

The market is particularly sensitive to diesel because refining capacity cannot quickly switch between products. Diesel is also critical to freight transport, agriculture, construction and industrial activity, meaning prolonged shortages can feed directly into transportation and food costs.

U.S. distillate inventories — which include diesel and heating oil — have fallen to about 107.2 million barrels, their lowest level for this time of year in roughly three decades, according to Reuters. Analysts expect stocks to come under further pressure.

Russia has also moved to protect its domestic fuel supply by extending restrictions on gasoline and diesel exports through January 2027, further reducing the amount of refined fuel available to international buyers.

The squeeze illustrates why a disruption to oil infrastructure can hit consumers even when crude prices do not rise by the same magnitude. Refineries must turn crude into usable products such as diesel and jet fuel, and outages can cause the price of those products to spike rapidly when inventories are already low.

Europe is particularly exposed because its refined-fuel market has faced major logistical and geopolitical disruptions since the war-related shutdowns around the Strait of Hormuz. European refining margins had already reached unusually high levels earlier this year as supply routes were disrupted.

Oil itself also climbed sharply Monday.

Brent and U.S. crude settled about 5% higher as uncertainty persisted over when the Strait of Hormuz might reopen and as Washington and Tehran continued to trade demands over compensation and the conflict.

For consumers, the biggest concern is that diesel could remain under pressure even if crude prices stabilise.

Refinery outages, depleted inventories, export restrictions and disrupted shipping routes are creating a separate refined-fuel squeeze.

That raises the risk of higher prices for trucking, farming, air travel and everyday goods — potentially extending the energy shock well beyond the pump.