Diesel prices in the U.S. reached a new high on Monday, with refineries operating at nearly full capacity. Oil industry leaders have indicated that supply will remain tight as we head into winter.
At the Asia Pacific Petroleum Conference in Singapore, Vitol CEO Russell Hardy mentioned that the global market is facing a deficit of about two million barrels a day due to declines in refined products from Russia and another nearly two million barrels from the Middle East, as reported by Reuters.
Despite Middle Eastern producers exporting around nine million barrels a day of crude, only one million of those are refined products. Hardy added that the current refining capacity isn’t sufficient to prevent stockpile reductions. “We’re pretty much at the bottom of our stockpiles,” he noted.
The national average price for diesel hit $5.90 a gallon on Monday, significantly up from $3.70 a year ago, according to AAA. Data from the Energy Information Administration shows that U.S. distillate stocks, which include diesel and heating oil, were 14% lower than the five-year average as of the week ending August 28, with refineries operating at 98% capacity.
“Households might feel the impact less at the gasoline pump but more in terms of everything that trucks transport: groceries, building materials, parcels, and heating oil in the Northeast,” shared Stuart Turley, CEO of the Sandstone Group. He mentioned that while gasoline prices hovering around $4.15 nationally are concerning, it’s the elevated diesel prices that are particularly alarming. He advised heating oil customers to shop early and noted that airlines may continue to add fuel surcharges or cut back on services to less traveled routes.
As of September 1, the diesel crack spread, reflecting the difference between diesel and crude prices, exceeded $106 a barrel, according to Bloomberg. GasBuddy had previously forecast that diesel prices could average $3.55 a gallon in 2026.
Mark Senn, Phillips 66’s Senior Vice President of Global Trading, told attendees that most U.S. refineries are already at capacity. He pointed out that low diesel supplies as winter approaches will likely keep prices elevated.
the *live* national average price of diesel according to GasBuddy has reached $5.900/gal, 10 cents away from reaching $6 for the first time ever.
— Patrick De Haan (@GasBuddyGuy) September 8, 2026
The International Energy Agency reported that global refineries processed 80.9 million barrels a day in July, which is nearly five million barrels less than last year. Meanwhile, 8.3 million barrels a day of oil output from the Persian Gulf remained offline. The tighter markets for distillate fuels have driven refining margins in the Atlantic Basin to all-time highs.
Farmers and construction operators should prepare for diesel prices above $5 as a baseline for their budgets, rather than viewing it as a temporary spike, according to Turley. He stressed that no additional refining capacity is available to help if winter cold sets in.
Following drone strikes on its refineries, Russia implemented a ban on diesel exports starting July 8, which was later extended through the end of September, as reported by CNN and Reuters.
Iran has been blockading the Strait of Hormuz, a critical route for oil, since the war began. Reports state that Iranian-backed Houthi rebels attacked Saudi oil facilities recently.
In early September, President Trump met with refining industry executives to discuss regulatory updates, streamlined permitting processes, and investment opportunities to expand refining capacity. A White House representative indicated that the administration should closely monitor domestic inventories as winter nears and be prepared to alleviate transportation bottlenecks to ensure product delivery to consumers.
Ellis, from the America First Policy Institute, also mentioned that Congress could aid by passing permitting reforms. While diesel exports from the U.S. have increased, domestic inventories have reached record lows. Restricting exports could negatively affect the U.S. since diesel operates within a global market.
According to Hardy, elevated prices and fuel shortages might result in a drop in global oil demand by approximately 1.5 million barrels a day this year in comparison to 2025.
