NEW YORK / RankWire.AI / – On Wednesday, diesel prices stayed elevated as the supply of refined products continued to tighten, putting pressure on fuel markets across the United States and Europe. U.S. ultra-low sulfur diesel futures surged 7.4% on Monday, closing at $4.19 a gallon. This marked the biggest single-day gain for the contract since July 13. Early trading on Wednesday pushed the price close to $4.28 per gallon, while European diesel refining margins remained near historic highs after nearly a 10% increase on Monday.
The average retail price of diesel in the U.S. was $5.257 per gallon on August 10, down from $5.348 a week earlier. Despite the decrease, prices stayed well above the $4.578 average recorded on July 6. According to the U.S. Energy Information Administration, distillate inventories declined by 3.5 million barrels during the week ending July 31. Stocks fell to 107.2 million barrels from 110.6 million the previous week. This figure is 5.1% lower than a year ago and 16.1% below the level two years prior.
Meanwhile, Europe has experienced unusually high costs associated with converting crude oil into diesel. The premium for European low-sulfur gasoil over crude reached a record $74.66 per barrel on July 30. Diesel margins in Europe then increased nearly 10% by August 10. The European Central Bank reported that diesel pump prices hovered around €1.98 per litre in the third week of July. Its analysis indicated that refining margins contributed roughly €0.35 per litre during the first three weeks of July, a sharp rise from earlier levels.
Refinery outages limit diesel supplies on the global market
Disruptions at refineries have further reduced the already limited production of fuel in the international marketplace. An attack targeted a refinery in Russia’s Tatarstan region, compounding the decline in Russian refining activity. Additionally, Saudi Arabia’s Jazan refinery has remained offline since July 27 after an earlier attack. These outages impact regions that typically supply large volumes of refined petroleum products internationally. During June, global refinery runs had already fallen significantly below levels from the same period last year, with several major centers operating at reduced throughput.
Russia has also imposed restrictions on diesel exports, extending them through January 31, 2027. The country has similarly limited gasoline shipments. Shipping flows from the Middle East have also faced setbacks due to sharply decreased vessel activity through the Strait of Hormuz. Traffic in this vital passage has dropped well below pre-conflict levels. Reduced refining activity in China has further constrained petroleum product supply to global markets during a period of high refining margins.
Despite high refinery activity, the diesel market remains tight
U.S. refiners have processed large amounts of crude oil, yet domestic fuel inventories remain scarce. Federal energy data show that crude input to U.S. refineries during the first seven months of 2026 reached their highest levels since 2019. Refinery utilization rates stay high as strong profit margins encourage continued processing. Nevertheless, distillate inventories at the start of August are at their lowest for this time of year in nearly thirty years. Diesel and heating oil are the primary components tracked within the distillate inventory category in weekly U.S. petroleum data.
Crude oil prices also rose on Wednesday, with Brent approaching $89.81 per barrel and U.S. West Texas Intermediate near $84.08. The diesel sector faces added pressure due to tightening supply, driven by refinery disruptions and export restrictions. Diesel remains a vital fuel for sectors such as trucking, agriculture, construction, manufacturing, and other commercial activities. The combination of low U.S. inventories, record European refining margins, and diminished international refinery output has contributed to persistent tightness in the refined-product markets across both the Atlantic and the Pacific.