Diesel Shortage Will Last Through Winter, Top Oil Traders Warn, As US Prices Hit Record

U.S. diesel hit a new record Monday with refineries running near capacity — and oil executives warned supplies would stay tight through winter.

The global market is short approximately two million barrels a day of refined products from Russia and an additional nearly two million from the Middle East, Vitol CEO Russell Hardy told the Asia Pacific Petroleum Conference in Singapore on Tuesday, Reuters reported.

Middle Eastern producers still export about nine million barrels a day of crude but only one million of refined products, and refiners are “still not running enough refining capacity to prevent those draws,” Hardy said, according to the outlet. “We’re pretty much at the bottom of our stockpiles.”

The national average diesel price hit $5.90 a gallon Monday, up from $3.70 a year ago, according to AAA. U.S. distillate stocks, which include diesel and heating oil, were 14% below the five-year average for the week ending Aug. 28 while refineries ran at 98% of capacity, according to the Energy Information Administration.

“Households will feel this less at the gasoline pump than in the price of everything trucks move: groceries, building materials, parcels and heating oil in the Northeast,” Stuart Turley, president and CEO of the Sandstone Group and host of the Energy News Beat podcast, told the Daily Caller News Foundation. “Gasoline near $4.15 nationally is painful versus last year but not the emergency diesel has become. Heating oil customers should shop early. Airlines will keep adding fuel surcharges or trimming capacity on thin routes.”

The U.S. diesel crack spread, which measures the gap between diesel and crude oil prices, rose above a record $106 a barrel on Sept. 1, according to Bloomberg. GasBuddy forecast on Jan. 6 that diesel would average $3.55 a gallon in 2026.

Most U.S. refineries are already running at full capacity, Phillips 66 Senior Vice President of Global Trading Mark Senn told the conference, Reuters reported. Low diesel inventories heading into winter would keep prices high, Senn said. 

Global refineries processed 80.9 million barrels a day in July, nearly five million below a year earlier, while 8.3 million barrels a day of Persian Gulf oil output remained shut in, the International Energy Agency said in its August oil market report. Tighter distillate markets pushed refining margins in the Atlantic Basin to record highs, the agency said.

Farm and construction operators “should treat $5-plus diesel as the base case for budgets, not a spike that has already peaked,” Turley told the DCNF. “There is no spare refining capacity sitting idle to rescue a cold December.”

Russia banned diesel exports July 8 after Ukrainian drone strikes on its refineries caused fuel shortages at home, CNN reported. The government extended the ban through Sept. 30 on Aug. 29, Reuters reported.

Iran has blockaded the Strait of Hormuz, which handled about a fifth of the world’s oil before the war began Feb. 28, according to Quartz. Iran-backed Houthi rebels struck Saudi oil facilities Tuesday, The Associated Press reported.

President Donald Trump met with refining executives at the White House on Sept. 1. They discussed regulatory changes, faster permitting and additional investments to expand refining capacity, a White House official told the DCNF at the time.

The administration should watch domestic inventories closely heading into winter and be ready to remove transportation bottlenecks and use emergency authorities and regional fuel reserves “to keep product moving to consumers,” Ted Ellis, deputy director of energy and environment at the America First Policy Institute, said in a statement to the DCNF. “The long-term solution closely matches what the administration is already doing: create more supply and more capacity rather than trying to allocate scarcity.”

Ellis noted that Congress can also help by passing permitting reform.

U.S. diesel exports have risen while domestic inventories fell to record seasonal lows, Bloomberg reported. Restricting exports would hurt the U.S. because diesel trades in a global market, Turley said.

High prices and fuel shortages would reduce global oil demand by about 1.5 million barrels a day this year compared with 2025, Hardy said, according to Reuters.