Goldman Sachs Doubles Diesel Margin Forecast as Global Fuel Crunch Deepens

Goldman Sachs sharpened its warning on the global diesel market on August 31, 2026, more than doubling the refining margins it expects producers to capture next year. The bank now forecasts that the profit from turning a barrel of crude into diesel will average 63 dollars in the United States during 2027, against an earlier estimate of 27 dollars. For refiners in the European Union the figure was raised to 49 dollars from 19 dollars. Analysts Yulia Zhestkova Grigsby and Daan Struyven wrote that repeated strikes on refineries in the Middle East and in Russia have squeezed an already stretched refining system, and that diesel sits at the center of the rally in refined product margins.

The call marks a clear escalation from the bank's position a month earlier. At the end of July, Goldman described diesel as the single biggest supply squeeze in oil markets and noted that global refining activity had fallen to its weakest seasonal level since the pandemic year of 2020. Its analysts then estimated that worldwide diesel exports had dropped by roughly 2.6 million barrels per day, or about 35 percent, in the space of one month. The August revision moves the story from a temporary squeeze to a structural shortage that the bank now expects to run well into 2027.

The most immediate driver is Russia. Ukrainian drone units hit Russian oil refineries at least 21 times during August, the heaviest monthly total since the start of the full-scale war. Russian crude processing averaged about 3.8 million barrels per day over the month, the lowest level in more than two decades, with diesel output down roughly 23 percent and gasoline supply down about 20 percent. Queues formed at filling stations in Moscow and in several regions. On August 29 the Russian government extended its ban on exports of diesel, gas oil and marine fuel by producers until September 30. That measure was first introduced on July 8 and had already been renewed once. A separate ban covering companies that do not refine themselves runs until January 31, 2027, and restrictions on jet fuel exports remain in force until the end of November 2026. Russia supplied close to 10 percent of the world's diesel before the strikes intensified, so every extension removes cargoes that European and Mediterranean buyers must now replace with barrels from India, the United States Gulf Coast or East Asia.

The second driver sits in the Persian Gulf. Refined product exports from the region are running at roughly 40 percent of pre-war levels according to Goldman, against 70 to 80 percent for crude oil. Several Gulf refineries have been damaged during the conflict. That gap between crude availability and product availability explains why fuel prices have kept climbing even with Brent trading below 90 dollars a barrel.

Goldman puts current refinery outages at about 60 percent above the seasonal norm. The International Energy Agency measured global refinery crude throughput at 80.9 million barrels per day in July, roughly 5 million barrels per day below the same month of 2025. Higher runs in the Americas and in Africa have replaced only about a third of the lost volume.

The United States shows the strain clearly even though it remains a net exporter of diesel. Commercial inventories of distillate fuel oil, the category that covers diesel and heating oil, fell by 2.2 million barrels in the week ending August 21 to 103.4 million barrels. The Energy Information Administration published the figure on August 26 at 10:30 Eastern Time in its Weekly Petroleum Status Report. That reading was the lowest for late August since the weekly series began in 1982. Stocks are thin despite refineries running at 97.4 percent of capacity, because distillate exports climbed from 1.6 to 1.79 million barrels per day as American cargoes filled the gaps left by Russia and the Gulf.

Prices followed. The ultra-low sulfur diesel crack spread, which measures the premium of diesel futures over West Texas Intermediate crude, reached an intraday record of 102.20 dollars per barrel on August 17 and settled in triple digits for the first time. A normal reading sits between 15 and 30 dollars. The national average retail price of on-highway diesel reached 5.652 dollars per gallon on August 24, an increase of 19.8 cents in one week and 1.944 dollars above the same week of 2025. That leaves the pump price roughly 16 cents short of the all-time high of 5.810 dollars recorded in June 2022.

New York sits at the center of the American exposure. New York Harbor is the delivery point for the ultra-low sulfur diesel futures contract that anchors pricing across much of the country, and the East Coast depends on barrels shipped up from the Gulf Coast plus imports that European buyers are now bidding away. Regional distillate inventories have stayed historically tight through the summer. The Northeast is heading into the heating season with a smaller cushion than usual, because heating oil and truck diesel draw on the same middle distillate output.

The pressure spreads quickly beyond fuel buyers. Diesel powers long-haul trucking, rail freight, construction equipment, harvesters and standby generators, and demand for it responds slowly to price. Fuel surcharge tables indexed to the weekly Energy Information Administration benchmark have had to be revised upward after two consecutive increases of close to 20 cents per gallon, which lifts the delivered cost of almost every physical good. The timing is difficult because the northern hemisphere harvest is under way and refiners are approaching their autumn maintenance season, when part of the capacity comes offline by design.

Until refining capacity comes back, buyers should plan for expensive diesel and thin inventories, which is precisely the outcome Goldman has now written into its 2027 forecasts.