On August 10, diesel prices in the United States and Europe saw a significant increase. The futures of ultra-low sulfur diesel in the U.S. rose by 7.4%, closing at $4.19 per gallon, marking the largest single-day gain since July 13. Meanwhile, the refining margins for diesel in Europe also surged by nearly 10%.
According to reports from Reuters, this surge occurred following attacks on a refinery in Tatarstan, Russia by Ukraine and another attack by Houthi rebels in Yemen on the Jazan refinery in Saudi Arabia. These two incidents have further tightened global diesel supply.
The Jazan refinery has been closed since the attack by the Houthi rebels on July 27. Industry monitoring agency IIR Energy stated that the refinery, which was initially scheduled to resume operations on August 15, has now been postponed to August 30.
Analyst Bob Yawger from Mizuho noted in a report that the attacks on refineries have resulted in a significant loss of diesel supply in the market.
The increase in diesel futures prices has surpassed that of crude oil. On August 10, the futures of West Texas Intermediate (WTI) and Brent crude oil in the U.S. both rose by around 5%, lower than the 7.4% increase in diesel futures.
The global diesel market was already facing supply pressures. Ongoing conflicts in Iran have led to the blockade of the Strait of Hormuz, hindering the transportation of diesel and crude oil from the Middle East and further reducing global diesel supply.
Meanwhile, Ukraine has intensified attacks on Russia’s energy infrastructure in recent months. To secure domestic supply, Moscow has banned the export of gasoline and diesel, a prohibition that will remain in place until the end of January 2027, tightening international market supply even further.
Diesel inventories in the United States are also at a low level. As of July 31, inventories of distillates, including diesel and heating oil, stood at 107.2 million barrels, dropping to the lowest level for the same period in nearly 30 years.
A preliminary survey by Reuters indicates that analysts expect a reduction of approximately 1.6 million barrels in distillate inventories in the U.S. last week.