Diesel Prices in 2026 — Inside the Middle-Distillate Squeeze

Why are diesel prices so high in 2026?

Diesel prices in 2026 have been driven by lost supply rather than rising demand. The International Energy Agency (IEA) estimates that global diesel and gasoil availability was 1.7 million barrels a day (mb/d) lower year on year in the third quarter ^[1]. Net gasoil exports from Russia and the Middle East fell by 1.3 mb/d to 820,000 b/d in September, more than 60% below a year earlier. The IEA points to refinery cuts in the Middle East and drone damage to Russian refineries ^[1]. Before the war, about 900,000 b/d of diesel moved through the Gulf, according to Vortexa ^[2].

The result has been a run of records. The US diesel crack spread, the margin between diesel and crude, touched a record intraday high of $108.02/bbl in the first week of September ^[2]. It then set a new record of $118.62/bbl on 14 September ^[3]. The IEA says wholesale diesel reached all-time highs of around $220/bbl in Europe and the United States, and exceeded $200/bbl in Singapore in mid-September ^[1].

Retail prices followed. The AAA average for US diesel rose above $6.50 a gallon in the week of 22 September, a record ^[4]. The US Energy Information Administration (EIA) says retail diesel averaged $6.29/gal across September ^[5]. In the EU, European Commission data published on 1 October put the average diesel pump price at a record €2.24 per litre, about 41% above its pre-war level ^[6].

Prices have eased since then, but not far. The Platts European diesel barge crack peaked at $98.01/bbl on 1 September. It averaged about $60/bbl from 1 to 12 October, then rose above $74/bbl on 16 October ^[7]. Northwest European diesel cargoes were assessed at $1,471.75 per tonne on 15 October, down from a peak of $1,642.25/t on 15 September ^[8]. The IEA says diesel prices remain close to double their pre-crisis levels ^[1].

How tight is the jet fuel market?

Jet fuel led the first phase of the crisis. Platts assessed Singapore jet fuel at an all-time high of $231.42/bbl on 4 March. Northwest European jet cargoes hit a record $1,476.50/t on 6 March ^[9]. By August the order had reversed: diesel cost more than jet in Europe for the first time in more than a year, according to LSEG data. Europe was replacing lost Middle East jet with cargoes from the US and Nigeria, but struggled to secure enough diesel ^[10]. Platts data show the European diesel crack stayed above jet from mid-June to mid-September ^[7].

Jet has now regained the lead. On 16 October the European jet barge crack was $11.75/bbl above the diesel crack ^[7]. Consultancy Energy Aspects expects a European jet fuel deficit of 510,000 b/d in the fourth quarter, even as Europe buys from more distant suppliers such as South Korea ^[11]. The IEA adds that refiners maximising kerosene output have lowered gasoil yields, which links the two markets ^[1]. In June, the International Air Transport Association (IATA) forecast that jet fuel would average $152/bbl in 2026, against $90 in 2025 ^[11].

Is there a diesel shortage in Europe?

Europe's exposure stems from its dependence on imported diesel. Before the war, the Middle East and Russia supplied nearly a third of global diesel exports ^[6]. Vortexa data show European diesel imports fell to 1 mb/d in September. That was the lowest September on record and 600,000 b/d below a year earlier. European refinery runs also fell by 600,000 b/d from August ^[12].

The supply mix has shifted. In August the US shipped about 520,000 b/d of diesel to Europe, according to Vortexa. That was roughly half of Europe's seaborne imports from outside the region, against about a quarter a year earlier. Russian seaborne diesel and gasoil exports were about 150,000 b/d in the first 25 days of August, 81% below the five-year seasonal average. India supplied about 60% of the diesel moving through the Bab el-Mandeb towards Europe ^[13].

Stocks are thin. Inventories in the Amsterdam-Rotterdam-Antwerp (ARA) hub were 16% below their five-year average in July ^[3]. Total OECD gasoil stocks fell counter-seasonally to 565 million barrels in July, the lowest since November 2023 ^[1]. The EU held 36 million tonnes of emergency diesel stocks at the end of June, about two months of consumption, according to Eurostat data cited by the Wall Street Journal ^[6].

How hard are refiners running?

US refiners have filled much of the gap. The EIA says US refinery utilisation averaged more than 95% of capacity from May to September, the highest for those months since 1998. Total output reached its highest level since 2019, even though capacity has fallen 4% since then ^[14]. In the week to 16 October, refineries ran at 93.4% of capacity and distillate output was 5.2 mb/d ^[15].

Export demand has been strong. US diesel exports reached a record 1.6 mb/d in August, mostly to Latin America and Europe, according to S&P Global data ^[16]. Even so, US distillate stocks fell to 107.9 million barrels on 11 September, the lowest for that time of year since records began in 1982 ^[3]. In the week to 16 October they were still 9% below the five-year average ^[15].

Elsewhere, refiners are under strain. The IEA says record freight and crude costs have crushed margins in Europe and Asia, while discounted feedstocks have pushed US margins to new highs ^[1]. It expects global refinery runs to reach a seasonal low of 81.3 mb/d in October, before recovering to 84.6 mb/d by year-end ^[1].

Stock releases and the export-ban debate

Policy has focused on diesel. On 2 October, G7 leaders agreed to release 100 million barrels of diesel and crude over four months, with a substantial diesel release in the first 20 days ^[17]. The G7 also pledged to avoid energy export restrictions among its members ^[8]. On 15 October the IEA Governing Board agreed to speed up the remaining releases from its March collective action. Members plan to release more than 20 million barrels of diesel "as soon as possible" ^[18]. About 330 million barrels had been released by then, but only 8 million barrels in September ^[8]. On 23 October Reuters reported that Germany's stockholding agency EBV had issued a tender to sell diesel, heating oil and crude from its reserves ^[19].

The United States debated restricting diesel exports in September. On 22 September President Donald Trump said he had called for restrictions. Treasury Secretary Scott Bessent said officials were examining whether a full or partial ban was feasible ^[16]. Energy Secretary Chris Wright and Interior Secretary Doug Burgum warned against a ban, as did oil industry groups ^[4]. An S&P Global analysis estimated that eliminating the US export surplus would require run cuts of about 1.9 mb/d, roughly 12% of US throughput ^[16].

Russian supply is also in focus. On 9 October Deputy Prime Minister Alexander Novak said Russia was ready to export 300,000 tonnes of diesel in October, 500,000 t in November and 1 million t in December ^[7]. The IEA says the easing of Russian restrictions is unlikely to change the balance, because the constraint is a lack of working refinery capacity ^[1].

What to watch this winter

The IEA expects gasoil supply to fall short of demand in the fourth quarter. It does not expect lost inventories to be rebuilt before the second half of 2027 ^[1]. The EIA expects East Coast distillate stocks to stay about 20% below their 2021–25 average through the winter. Heating oil prices are up more than 30% on last winter ^[5]. Indicators to follow:

• Release delivery. Whether the 20-million-barrel diesel release and the G7 volumes reach the market quickly ^[8,18].
• Freight. The IEA warns that tension in tanker markets could lift delivered diesel prices in Europe, Africa and Latin America ^[1].
• New supply. China resumed product export licences in early October, while Russian volumes depend on refinery capacity ^[1,7].
• Cracks and stocks. The European diesel crack, ARA inventories and weekly EIA distillate data are the clearest real-time signals.
• Next forecasts. The EIA's next Short-Term Energy Outlook is due on 10 November ^[5].

Alupetra follows refined product markets, including diesel and jet fuel, from its Istanbul, London and Dubai offices.