Global Refinery Crunch Pushes Diesel Prices to New Records

U.S. diesel prices set another record last week, surpassing $6.50 per gallon, as global refined-fuel supplies tighten. In Europe, pump prices are climbing and officials warn of looming shortages that would hit already strained economies. Industry sources and analysts point to insufficient refining capacity worldwide to replace lost output from the Middle East and Russia. The supply squeeze has several immediate drivers. Russia announced an extension of its diesel-export ban through the end of October, and Ukrainian drone strikes have continued to target Russian refineries, including an attack reported on one of Russia’s largest facilities. At the same time, International Energy Agency data cited by the Wall Street Journal indicate diesel production losses in the Middle East are roughly three times greater than the losses from Russia. The shortage has prompted debate in Washington about possible policy responses. Representative Tim Burchett filed legislation seeking a U.S. ban on diesel exports, a measure supported by Senate Majority Leader John Thune. Administration officials named in the reporting—Energy Secretary Chris Wright and Interior Secretary Doug Burgum—warn that an export ban would be counterproductive, underscoring the depth of concern even as some lawmakers push for protectionist steps. Analysts say the tight market reflects longer-term structural changes in global refining capacity. Over the past decade, many refineries in Europe and the U.S. were closed or repurposed amid weak returns and shifting policy priorities, while Middle Eastern producers expanded refining for domestic employment and supply security. That expanded capacity is now under strain—some facilities have been damaged in strikes on Gulf infrastructure—and U.S. refiners are largely running near maximum rates. Even modest offline assets, such as a roughly 50,000-barrel-per-day Romanian refinery linked to Lukoil that remains idle following U.S. sanctions and a stalled sale process, could have helped ease pressure in the current environment. With tanker traffic through the Strait of Hormuz reduced, ongoing attacks on refineries, and tough export decisions on the table, the reporting concludes there is no near-term fix to global refined-fuel shortages. Policymakers face trade-offs between easing domestic fuel pain and exacerbating shortages elsewhere, and Europe appears especially vulnerable because of its import dependence and declining refining footprint.