Diesel refining margins have reached their highest levels of the year since late October, reflecting a significant contraction in global supply due to outages in Russia and the Middle East. This pressure has led to price increases across key Atlantic Basin markets, notably at Amsterdam-Rotterdam-Antwerp (ARA), New York Harbor and the U.S. Gulf Coast.
Rising pressure on diesel supply
Crack spreads, which indicate the profitability of refining crude oil into finished products, surged in these regions, exceeding $1 per gallon for the first time in over a year between mid-October and mid-November. These spreads reflect the difference between the price of crude oil, in this case Dated Brent, and the price of the refined product, diesel.
The latest European Union sanctions against Russia, implemented in October, target Russian oil majors Rosneft, Lukoil and Gazprom Neft. These measures reinforce earlier bans from 2022 on Russian crude oil and refined products following the invasion of Ukraine. The sanctions now also extend to refineries in third countries such as Türkiye and India, which have been processing discounted Russian crude and exporting refined diesel to the European market.
Offline refineries and market tension
At the same time, Ukrainian strikes on Russian petroleum infrastructure have curbed Russian diesel exports. This directly impacts countries still importing Russian fuel, which must now compete for alternative volumes at higher prices.
Beyond Russia, the Al Zour refinery in Kuwait—commissioned in 2023—has been offline since late October. This facility had been a significant source of diesel for Europe following the enforcement of sanctions last year. Additional maintenance-related slowdowns at other Middle Eastern refineries have further tightened available supply.
U.S. exports on the rise
Amid sustained international demand, refiners that remain operational, especially on the U.S. Gulf Coast, have ramped up output. These facilities handle the bulk of U.S. petroleum product exports. U.S. gasoline shipments have reached their highest levels of the year, while exports of distillate fuel oil, including diesel, remained elevated in November compared to the 2020–2024 five-year average.
