Diesel prices in Europe have climbed 40% since mid-June, compared with a 5% rise in crude oil over the same period. Russian export bans, disrupted Middle Eastern refineries, and record U.S. shipments abroad are draining stockpiles just as peak winter demand approaches. The squeeze is already hitting palm oil growers in Southeast Asia, and it could ripple through agriculture, construction, mining, transport, and distribution.
Diesel prices in Europe have climbed 40% since mid-June, while crude oil has risen just 5% over the same period, Bloomberg reported. The gap points to a problem specific to diesel supply, not crude.
Russia, the world's number-two diesel exporter, has banned exports to manage a domestic supply squeeze after Ukrainian drone strikes on its refineries. Reuters reported last week that palm oil farmers in Southeast Asia are already facing diesel shortages and spiking prices.
U.S. exports hit a record as stockpiles shrink
U.S. diesel exports hit an all-time high of 1.9 million barrels a day in the first week of August. Exports had run at 1.5 million barrels a day for five weeks before that jump, Bloomberg reported. Refiners cannot produce more, so fuel sellers have drawn down stockpiles now at their lowest level since 1996.
Europe loses refining capacity and Russian barrels
In the European Union, as many as 30 refineries closed between 2009 and 2024. Another 400,000 barrels a day of capacity is set to close in 2025 as tightening emissions rules raise costs for refiners. The bloc has also cut off Russian-linked fuels, leaving it to compete with new buyers such as Brazil and Turkey for U.S. supply. EU diesel inventories have shrunk 30% since March, Bloomberg said.
According to Bloomberg, Eugene Lindell, head of refined products at consultancy FGE NexantECA, said "Europe has a tremendous diesel problem."
Asia and the U.S. have little spare capacity
Kpler's head of clean petroleum products, Zameer Yusof, said Gulf Coast refiners cannot keep exporting diesel to Northwest Europe indefinitely because they have their own needs to meet, according to Bloomberg. Asia, meanwhile, has its own refining losses in the Middle East and lost access to Russian capacity, oil analyst June Goh of Sparta Capital said, according to Bloomberg — though she added that Europe's crunch is not an immediate crisis for the region but one further down the line.
The strain extends beyond diesel. EU natural gas stocks are running below the seasonal average, and analysts are concerned shortages might emerge by winter as buyers hold off for lower LNG prices that appear unlikely for now. Relief for diesel markets looks similarly unlikely before peak demand hits this winter.
Source: Oilprice.com
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