Diesel prices have surged to unprecedented levels across Europe and the United States, driven by conflicts in Iran and Ukraine that have sharply reduced exports from key producers such as Russia, Saudi Arabia, and the United Arab Emirates. With limited alternatives available, further price increases appear likely.
In Europe, diesel futures closed last week at an all-time peak, more than doubling since the start of 2026. Supply interruptions have extended to the Red Sea, a critical shipping route where Saudi Arabia loads most of its diesel exports. The ongoing wars in the Middle East and Ukraine have also damaged oil refineries in the region, while refineries elsewhere are operating at maximum capacity to meet fuel demand. For instance, US refineries ran at their highest levels in eight years in late August, the International Energy Agency (IEA).
The IEA highlighted that many refineries worldwide are already operating near full capacity, leaving few options to ease supply constraints or prevent further price hikes in the coming months. Middle Eastern diesel exports fell by half between March and August compared to the previous year, averaging 800,000 barrels per day. This region accounted for nearly 41% of Europe’s diesel imports in 2025, underscoring its importance to the market.
Analyst George Shaw from Kpler warned that any additional disruptions to Red Sea shipments could further tighten an already strained global diesel market. Refining capacity remains the critical bottleneck affecting supply stability.
In a significant development, Russia banned diesel exports in July after Ukrainian drone attacks damaged its refinery operations. Despite a recent announcement by US President Donald Trump that Russia and Ukraine had agreed to cease attacks on each other’s energy infrastructure, hostilities continue. Ukrainian President Volodymyr Zelenskiy is scheduled to meet with Trump in the coming days.
Before the export ban, Russia— the world’s second-largest diesel exporter after the US—supplied substantial volumes to countries like Turkey and Brazil. These importers have since been forced to seek alternative sources. Meanwhile, Europe, traditionally a net diesel importer, saw stocks at the Amsterdam-Rotterdam-Antwerp refining and storage hub fall to their lowest levels for this time of year as of September 10.
In the United States, average retail diesel prices surpassed $6 per gallon for the first time on record this month. Despite refiners operating near full capacity, inventories remain below typical seasonal levels. Although diesel stocks increased by approximately 600,000 barrels last week to 96.97 million barrels, this figure is still nearly 15% below the five-year average for mid-September.
Asian diesel prices have also climbed close to record highs, influenced by supply disruptions from the Middle East and Russia. The benchmark diesel swaps contract for Asia, GO10SGSWMc1, has eased from its March peak of over $200 per barrel but remains around $180 per barrel as of September 18—still double pre-war prices.
China’s diesel exports declined by 26% in the second quarter compared to the previous year, following government restrictions on refined product shipments after the Iran conflict, which likely tightened global supplies. However, exports rebounded in August, reaching their highest level in nearly two and a half years at 320,000 barrels per day, leading to reduced domestic stockpiles.
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