Why does Goldman Sachs say diesel is 'at the epicenter' of a fuel supply squeeze?

Goldman Sachs says diesel is 'at the epicenter' of a fuel supply squeeze because global refinery activity fell this month to its lowest seasonal level since the pandemic, driven by outages in Russia and the Middle East due to ongoing conflicts and subdued processing in China—cutting global throughput by an estimated 6.5 million barrels a day year-on-year—while diesel inventories remain below seasonal norms, exports are declining, and demand is approaching the fourth-quarter peak season.

What does Goldman Sachs recommend for investors concerned about prolonged geopolitical risks affecting diesel supply?

Goldman Sachs recommends that investors seeking to hedge prolonged geopolitical risks take a long position in the December 2026–March 2027 European diesel timespread, as refined fuel supplies are expected to remain exceptionally tight amid constrained global refinery output and tightening diesel fundamentals.

Goldman Says Diesel at ‘Epicenter’ of Squeeze as Refineries Hit

Jul 29, 2026

Goldman Sachs warns of a global diesel supply squeeze due to refinery outages in Russia, the Middle East, and China, reducing throughput by 6.5 million barrels daily. Investors are advised to hedge European diesel timespreads amid tight inventories and peak demand.

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