“Diesel Is At Epicenter Of Supply Squeeze,”: Goldman
Goldman analysts are out with an eye-opening note showing that global refinery runs have plunged to their lowest seasonal level since the Covid era as conflict-related outages hammer Russia and the Gulf while Chinese processing remains subdued.
Analysts, including Yulia Zhestkova Grigsby and Daan Struyven, introduced a new global refinery-runs nowcast, estimating that global runs declined by 6.5 million barrels per day from a year earlier in late July.
Non-OECD throughput dropped by 7 million barrels per day, led by the Middle East, Russia, and China. Higher utilization in the Americas and Africa offset only about 30% of the weakness elsewhere, even as U.S. refinery utilization exceeded 97%, the highest since 2018.
The decline in global refinery runs is tightening fuel supplies just as demand heads toward the fourth-quarter peak season. The analysts said diesel inventories remain below seasonal norms while exports continue to slide, leaving the fuel especially vulnerable to further supply disruptions.
“Diesel is at the epicenter of the supply squeeze,” the analysts warned.
Europe’s benchmark diesel futures have surged this week to the highest level in almost three months. Global diesel exports have fallen by about 2.6 million barrels per day, or 35%, from a year earlier, while jet fuel exports have also slumped, further tightening middle-distillate markets.
We pointed out on Wednesday just how tight the products market is.
The European gasoil crack has surged above $70 a barrel as refiners run near capacity, with diesel and jet supplies constrained by outages, shipping risks, and reduced Russian exports.
Related:
The analysts recommended clients seeking to hedge ongoing geopolitical turmoil to take a long position in the December 2026–March 2027 European diesel timespread:
Hedging escalation with diesel length. Given the extreme tightness in refined products supply, which we think can linger for longer, we still recommend that investors and consumers seeking to hedge persistent geopolitical shocks in the Mideast and Russia go long the Dec26-March27 European diesel (gasoil) timespread.
Readers should revisit Struyven’s note from earlier this month outlining three reasons gas prices are likely to remain elevated (here).
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Tyler Durden
Thu, 07/30/2026 – 13:45
