U.S. Diesel Prices Exceed $6 per Gallon for First Time Amid Supply Constraints
- Diesel prices in the U.S. surpassed $6 per gallon for the first time on September 11, 2026.
- Goldman Sachs forecasts sustained high prices through 2027 due to refinery constraints and demand recovery.
- Experts warn of ongoing supply challenges even with recent commitments to release 100 million barrels of crude and refined products.
A driver fills up diesel fuel at a truck stop in Miami, Florida, as prices exceed $6 per gallon for the first time in history on September 11, 2026. According to Goldman Sachs, these elevated diesel prices could persist through 2027 due to refinery capacity issues and recovering demand from governments and companies working to rebuild depleted inventories.
Nikhil Bhandari, co-head of Asia-Pacific natural resources research at Goldman Sachs, stated, “We need to keep product prices high enough to have a certain level of demand destruction continuing next year,” emphasizing that high prices are essential to prevent recovering demand from overwhelming constrained refineries.
The investment bank predicts that global diesel and jet-fuel crack spreads will average over $40 per barrel in 2027, significantly above the normal level of approximately $20. This comes even as they anticipate Brent crude to stabilize around $80 per barrel as crude flows through the Strait of Hormuz return to normalization.
Baden Moore, a resources and energy research analyst at brokerage CLSA, highlighted that recent demand weakness does not signify permanent loss, noting that “underlying oil-product demand remains largely intact.” He indicated that buyers are balancing the market through measures like inventory management and consumption curtailment, with full replenishment of global inventories potentially taking two years.
Refinery Capacity Strain
Goldman Sachs projects that refined product demand could clash with a strained refinery network, anticipating another year of “negative refining capacity growth” in 2026, with a contraction of about 300,000 barrels per day outside China. The bank estimates that product inventories could drop below the lowest days-of-supply level since 2015.
Approximately 2 million barrels per day of Middle Eastern refining capacity remains offline, alongside operational disruptions at Russian facilities affecting diesel supply. U.S. refineries, even while running at elevated rates, will need to undertake deferred maintenance, temporarily reducing operational capacity.
The anticipated recovery of Gulf crude exports is not expected to significantly alleviate refined product shortages as shipments of diesel, gasoline, and jet fuel continue to face restrictions. Bhandari’s insights follow a decision by the Group of Seven nations to release 100 million barrels of crude and refined products over four months, which includes a major diesel release within the first 20 days. This announcement led to a 5.75% drop in European gasoil futures.
Despite this, experts remain skeptical about the long-term impact on prices and availability. Saudi Aramco CEO Amin Nasser remarked that emergency reserves “might buy us a winter,” but do not address the underlying supply issue. Moore reiterated that while these emergency releases may alleviate short-term liquidity concerns, they do not resolve the fundamental stock problem, with inventories being consumed rather than rebuilt, potentially extending the timeline for restocking. Chief economist Bernard Aw from Coface echoed this sentiment, describing the effects of such releases as “temporary rather than structural.”
News Courtesy of CNBC
