Global Refinery Crunch Pushes Diesel Prices to New Records

U.S. diesel prices reached a record high of $6.50 per gallon last week, while European fuel costs are skyrocketing, threatening economies already struggling. The world simply lacks enough refining capacity to compensate for the loss of Middle Eastern and Russian barrels. Russia has imposed a ban on diesel exports until the end of October, amid ongoing Ukrainian drone attacks on refineries.

The attacks, despite President Trump's plea for Ukrainian energy infrastructure to cease, are solely to blame for the surge in diesel prices. Losses from the Middle East are much higher, according to the International Energy Agency, with diesel output falling three times as much as from Russia. Calls in Congress for a U.S. ban on diesel exports are growing, with some lawmakers considering the proposal.

However, experts warn that such a ban would only increase prices globally, worsening an already dire fuel supply crisis. The crisis stems from over a decade of shuttered refineries due to the net-zero movement, primarily in Europe and the U.S. Middle Eastern petrostates built new refineries, accounting for a larger share of global refining capacity.

While this is economically motivated, the current loss of capacity has exposed the vulnerability of the global fuel supply. A potential U.S. export ban, though alleviating domestic prices, would worsen the situation for other nations. Europe, heavily reliant on energy imports, is likely to face the worst consequences.