Diesel Prices Surge to 12-Month Highs Amid Geopolitical Tensions and Supply Crunch!

Global refinery margins for diesel have surged to their highest point in the last 12 months, concluding November 2025. This significant increase is attributed to a confluence of factors, including the latest European Union (EU) sanctions targeting Russia and ongoing disruptions in supply chains.

Global Diesel Market Tightens

• The surge in diesel refinery margins marks a year-high, signaling increased profitability for refiners processing crude oil into diesel fuel.
• This price movement is a direct consequence of tightening global supplies, exacerbated by geopolitical events and operational issues at key refining facilities.

EU Sanctions Target Russian Crude Processing

• New EU sanctions are aimed at diminishing the value of Russian crude oil by targeting refineries in countries like Türkiye and India. These nations have been processing discounted Russian crude and exporting refined products, including diesel, to the EU.
• The sanctions follow earlier EU bans on refined products derived from Russian crude oil, implemented in July 2025.

Geopolitical Pressures Mount

• Ukraine's sustained attacks on Russia's refinery and petroleum export facilities have significantly curbed Russia's fuel product exports.
• Countries that previously relied on discounted Russian fuel volumes are now forced to bid for limited available supplies from other sources, contributing to price increases.

Key Refinery Outages Worsen Shortage

• An ongoing outage at Kuwait's Al Zour refinery, which came online in 2023, has further constrained available refined product supplies since late October.
• This outage occurs during a strong refinery maintenance season in the Middle East, with several other regional refineries temporarily reducing processing rates.
• Mixed reports regarding the progress of maintenance at Nigeria's large Dangote refinery are also adding pressure to the Atlantic Basin market.

Crack Spreads Surge to Record Highs

• Crack spreads for diesel fuel have increased sharply, with spreads in New York Harbor, the US Gulf Coast, and the Amsterdam-Rotterdam-Antwerp (ARA) shipping hub all rising above $1 per gallon for the first time in over a year.
• Crack spreads represent the profitability of refining crude oil into specific products, calculated by subtracting the crude oil spot price from the refined product price.

Market Impact and Price Drivers

• The impact has been most pronounced in the Atlantic Basin, leading to higher prices at the ARA shipping hub, a key benchmark for European prices, as well as in New York Harbor and the US Gulf Coast.
• Higher global prices affect the US market as refiners there can sell into both domestic and international markets.
• American gasoline and distillate fuel oil exports, including diesel, have remained high in November 2025 relative to the five-year average.

Impact

• This news directly impacts global energy prices, potentially leading to higher fuel costs for consumers and businesses worldwide.
• It could contribute to inflationary pressures and affect industries reliant on diesel for transportation and operations, including agriculture, logistics, and manufacturing.
• Impact Rating: 8/10

Difficult Terms Explained

• Refinery Margins: The profit a refinery makes by processing crude oil into refined products like diesel and gasoline.
• Sanctions: Penalties imposed by a government on another country or group of countries, often restricting trade or financial dealings.
• Crude Oil: Unrefined petroleum, the raw material used to produce various fuels and other petroleum products.
• Diesel: A fuel commonly used in diesel engines, found in vehicles, generators, and industrial machinery.
• Crack Spreads: The difference between the price of crude oil and the price of refined petroleum products, reflecting refinery profitability.
• Outage: When a facility, such as a refinery, is temporarily shut down, usually due to maintenance, technical issues, or accidents.
• Atlantic Basin: A region encompassing the North Atlantic Ocean and its surrounding landmasses, often used in energy market discussions to refer to trade flows between Europe, Africa, and the Americas.
• ARA Shipping Hub: A major center for the trading and storage of oil products in Amsterdam, Rotterdam, and Antwerp, serving as a key benchmark for European prices.