{"id":623338,"date":"2026-09-21T23:56:11","date_gmt":"2026-09-21T23:56:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/623338\/"},"modified":"2026-09-21T23:56:11","modified_gmt":"2026-09-21T23:56:11","slug":"global-refinery-crunch-pushes-diesel-prices-to-new-records","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/623338\/","title":{"rendered":"Global Refinery Crunch Pushes Diesel Prices to New Records"},"content":{"rendered":"

U.S. diesel prices broke another record last week, topping $6.50<\/a> per gallon. In Europe, fuel prices are soaring, and shortages are looming<\/a> over already struggling economies. There is simply not enough refining capacity in the world to make up for the loss of Middle Eastern and Russian barrels. And there is no quick fix.<\/p>\n

Last week, Russia said it would extend a ban on diesel exports until the end of October, as Ukrainian drone attacks on refineries continued, despite President Donald Trump\u2019s call on the Zelensky government to stop attacking energy infrastructure, blaming the diesel price surge solely on those attacks. The latest attack came on Sunday, targeting<\/a> one of Russia\u2019s largest refineries.<\/p>\n

However, the loss of fuel supply from the Middle East is much larger, the Wall Street Journal reported<\/a> last week, citing figures from the International Energy Agency showing the amount of diesel output lost in the Middle East was three times as high as lost Russian supply.<\/p>\n

Now, there are calls in Congress for a U.S. ban on diesel exports. Rep. Tim Burchett tabled a bill to that effect last week, and Senate Majority Leader John Thune has backed<\/a> the proposal. Energy Secretary Chris Wright and Interior Secretary Doug Burgum oppose<\/a> it as a bad idea that would ultimately backfire, but the very fact that some legislators considered an export ban suggests the supply situation is pretty grim even for the world\u2019s largest oil producer. Related: Hormuz Blockage Puts Qatar’s $83 Billion LNG Bet at Risk<\/a><\/p>\n

Diesel prices underpin the price of pretty much everything else. When they rise, other prices follow<\/a>, notably food prices, to which people are particularly sensitive. This is of particular concern in Washington ahead of the midterm elections in November, hence the idea of an export ban. A ban could bring down prices at home, but it would push prices even higher elsewhere, aggravating an already quite grave fuel supply crisis. It is a crisis that no one could have foreseen, but also one that might have arguably been less grave had there been more refining capacity in the world.<\/p>\n

The fact is that over the past decade or so, a lot of refineries have been shut down under pressure from the net-zero movement that has come to dominate energy policies, mainly in Europe, but also in the U.S. under Democratic administrations. Refining had become a losing game for many, so they either shut down or converted their capacity to biofuels.<\/p>\n

\u201cWe\u2019ve seen the oil majors effectively reduce their exposure to that sector because the returns on actual capital employed have been poor,\u201d Wood Mackenzie senior VP for refining, chemicals, and oil markets Alan Gelder told the Wall Street Journal. \u201cThe classic phrase we used was: \u2018How do you make a small fortune? Take a large fortune and build a refinery.\u2019\u201d<\/p>\n

While refineries closed in Europe and the United States, however, Middle Eastern petrostates built new ones, coming to account for a bigger portion of global refining capacity. Profit, per the experts cited by the WSJ, was not the primary motivation. Employment and domestic fuel supply security were. Now, that capacity has been compromised \u2013 and some of it has been damaged by Iranian strikes on Gulf energy infrastructure \u2013 and there is no one to pick up the slack, with U.S. refiners already operating at rates as high as they can.<\/p>\n

To add insult to injury, there is one refinery in Europe sitting idle because it is the property of Russia\u2019s Lukoil, which the Trump administration sanctioned last November, prompting the company to put its international business up for sale. According to a recent report<\/a> by the Financial Times, a deal between Lukoil and Carlyle Group for the latter\u2019s acquisition of the business had become \u201cbogged down in an inter-agency process involving the National Security Council, State Department and Department of Energy,\u201d leaving urgently needed refining capacity offline.<\/p>\n

\u201cThere is significant underutilised refining capacity across Lukoil\u2019s European assets that could help bring additional refined-product supply to market and ease pressure on fuel prices,\u201d Carlyle said, as quoted by the FT, referring probably to the Romanian Petrotel refinery, which has been idled since the U.S. sanctions went into effect. Lukoil\u2019s Bulgarian facility is operating. Petrotel has a capacity of about 50,000 barrels daily. This is not a huge amount of fuel, but in the current crisis, every barrel matters.<\/p>\n

There is no solution to the world\u2019s fuel problem in sight. Tanker traffic via the Strait of Hormuz remains severely depressed, Ukrainian drone attacks on Russian refineries continue, and if the U.S. bans diesel exports, according to the WSJ, China and India may follow its example, plunging the rest of the world into hitherto unseen levels of fuel shortages. The biggest loser of the situation, it appears, will be Europe, due to its heavy dependence on energy imports in both crude oil and refined products, and its shrinking refining capacity.<\/p>\n

By Irina Slav for Oilprice.com<\/p>\n

More Top Reads From Oilprice.com<\/p>\n

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