Global diesel supply will remain tight due to a lack of spare refining capacity, Russia’s ban on exports and the approach of peak winter demand, senior industry executives said on Tuesday.
The wars in Ukraine and Iran have impacted refineries in Russia and the Middle East, pushing diesel margins to record levels in Europe and the U.S., while reducing crude supplies to Asia.
“There’s really a shortage of products because we’re missing 2 million barrels a day from Russia, and we’re missing nearly 2 million barrels a day from the Middle East,” Vitol CEO Russell Hardy told the APPEC conference on Tuesday.
Hardy said crude is in a better supply position than products as the Middle East is exporting about 9 million bpd of crude and 1 million bpd of products.
“We’re still not running enough refining capacity to prevent those draws,” he said.
“We keep eating into the surplus that exists around the world, and we’re pretty much at the bottom of our stockpiles.”
Mark Senn, senior vice president of global trading at Phillips 66, said most U.S. refineries were already running flat out.
“When you’re looking forward to a winter season coming where diesel stocks are quite deficit, you’re setting up for an environment where that strength could continue in those markets,” he added.
U.S. diesel prices jumped to record highs late last week, while the product’s crack spread, a measure of refining profitability, surged to a record intraday high of $108.02 a barrel on Wednesday.
Vitol’s Hardy said high prices and the lack of available fuel supplies are expected to reduce global oil demand by about 1.5 million bpd in 2026 versus 2025.
He added that the gap between China’s crude imports in 2025 and 2026 at 5 million to 6 million bpd is unsustainable and he expects the gap to narrow towards the end of the year so China will have sufficient fuel for winter.
(Reporting by Florence Tan and Siyi Liu; Additional reporting by Trixie Yap; Writing by Emily Chow; Editing by Jacqueline Wong and Saad Sayeed)