Geopolitical Developments Contribute to Elevated Diesel Costs

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International refinery margins for diesel have widened since late October and elevated to their highest stage all 12 months, following refinery outages in Russia and within the Center East and new sanctions on Russia’s crude oil, resulting in restricted refinery manufacturing and a decreased world diesel provide. The influence was most pronounced within the Atlantic Basin, contributing to increased costs on the Amsterdam, Rotterdam, Antwerp (ARA) transport hub, a key benchmark for European costs, in addition to at New York Harbor and the U.S. Gulf Coast. The upper world costs additionally affected costs in america as a result of U.S. refiners can promote into each home and worldwide markets.

Crack spreads point out the profitability of refining crude oil into sure merchandise. They’re calculated by subtracting the spot market worth of a gallon of crude oil from the worth of a gallon of refined product. Crack spreads for diesel gasoline elevated sharply from mid-October to mid-November, with spreads in New York Harbor, the U.S. Gulf Coast, and the ARA transport hub all rising above $1 per gallon for the primary time in over a 12 months.

New EU sanctions in opposition to Russia have contributed to tight world diesel provide and rising crack spreads. In October 2025, the EU tightened restrictions on the most important Russian oil firms Rosneft, Lukoil, and Gazprom Neft. That tightening adopted EU sanctions in opposition to Russia applied in July that included an import ban on refined merchandise derived from Russia’s crude oil. The EU first banned the import of Russia’s crude oil and oil merchandise from refineries in Russia, together with diesel gasoline, in late 2022 and early 2023 in response to Russia’s full-scale invasion of Ukraine.

The most recent sanctions intention to decrease the worth of Russia’s crude oil by focusing on refineries in Türkiye and India, which have been processing discounted crude oil from Russia and exporting refined merchandise, together with diesel, to the EU.

In the meantime, Ukraine’s assaults on Russia’s refinery and petroleum export amenities have curbed Russia’s product exports of the fuels. Decreased exports straight have an effect on international locations which have continued to import fuels from Russia. Within the absence of discounted Russian volumes, these markets should as a substitute bid for out there volumes from different sources, additional contributing to rising diesel costs.

Exterior of Russia, an ongoing outage at Kuwait’s Al Zour refinery since late October has additional tightened out there refined merchandise provides. The Al Zour refinery got here on-line in 2023 and helped present gasoline provides to Europe after the implementation of the import ban on oil merchandise from Russia earlier that 12 months. The outage at Al Zour comes amid a comparatively sturdy refinery upkeep season within the Center East, as a number of different refineries within the area quickly cut back their processing charges. As well as, the progress of refinery upkeep on the massive Dangote refinery in Nigeria has acquired blended experiences, placing extra stress on the Atlantic Basin market.

Sustained worldwide demand amid constraints on worldwide provide have contributed to elevated demand for merchandise from these refiners that stay operational. These refiners embody refiners on the U.S. Gulf Coast, which provide most U.S. petroleum product exports. U.S. gasoline exports have risen to their highest ranges to this point this 12 months, based on each our Weekly Petroleum Standing Report and transport information from Vortexa. U.S. distillate gasoline oil exports, which embody diesel, have additionally been excessive in November, relative to the five-year (2020–24) common.

Principal contributor: Kevin Hack.