Historic first突破 of $100! U.S. diesel crack spread hits record high, inventories plunge to 30-year low

Global diesel supply is under simultaneous pressure from three directions. The Middle East situation adds another layer of shock. Since the outbreak of U.S.-Iran hostilities on February 28, the Strait of Hormuz has effectively been blockaded, severely disrupting the flow of Gulf crude oil and refined products. During this period, refineries have shifted capacity toward jet fuel production to hedge against potential shortages—further squeezing diesel output. Diesel and jet fuel are both middle distillates and share refining capacity; increasing production of one inevitably reduces output of the other. This week, Trump announced he would not extend the U.S.-Iran temporary ceasefire agreement reached in June; Iran responded by declaring it would adopt a comprehensive offensive strategy, reigniting tensions. Scott Shelton, energy expert at TP ICAP, warned that U.S. pressure on Iranian exports—and threats of penalties against buyers of Iranian crude—will impose further strain on the diesel market. Refining capacity constraints constitute the third limiting factor. According to the International Energy Agency’s latest monthly report, global refinery crude throughput averaged 80.9 million barrels per day in July—down roughly 5 million bpd year-on-year. This means that even with relatively ample crude supply, bottlenecks at the refining stage have become an independent constraint on refined product availability. U.S. inventories hit a 30-year low, becoming a focal point of global competition Demand-side pressures are equally significant—and the United States has emerged as the central hub fiercely contested by global diesel buyers. According to data released last week by the U.S. Energy Information Administration (EIA), U.S. distillate fuel inventories—including diesel and heating oil—stood at 107.1 million barrels as of August 7, the lowest level for this time of year since 1996. Meanwhile, European inventories have also approached lows last seen during the 2022 energy crisis. Faced with soaring crack spreads, U.S. refiners are aggressively expanding exports to capture profits. In the first week of August, U.S. distillate fuel exports surged to 1.9 million barrels per day—a new weekly record. Yet this export surge is rapidly depleting already-tight domestic inventories. Shohruh Zukhritdinov, CEO of oil trading firm NitrolOil, noted that although U.S. refiners have increased diesel output, robust export demand continues to draw down domestic stockpiles. Bank of America analysts described this dynamic as follows: the U.S. is currently the “only major supply hub still operating normally,” and the resulting global fuel scramble is pushing diesel crack spreads back to historically high seasonal levels. China, wary of potential domestic shortages, has yet to resume petroleum product exports at normal levels—further tightening available supply in Asian markets. Seasonal demand convergence accelerates transmission risks The current timing places markets in an especially precarious position. The Northern Hemisphere is entering harvest season, when agricultural machinery’s diesel consumption will surge sharply; falling temperatures soon afterward will drive up heating oil demand; meanwhile, refineries are set to enter their seasonal maintenance period, taking some capacity offline.

Reports indicated the Trump administration was considering a 90-day diesel export ban—later denied by the White House; U.S. Energy Secretary publicly opposed it

Energy Secretary Chris Wright bluntly stated at The Economist’s New York event that banning diesel exports was “definitely unworkable” and warned such a move would force refiners to cut capacity—thereby driving up gasoline and jet fuel prices. The Department of Energy subsequently issued a statement saying Wright was “fully aligned with the President” and that both were “jointly exploring all viable options to lower energy prices,” seeking to downplay the apparent disagreement. Soaring diesel prices intensify midterm election pressures U.S. diesel prices are at historic highs. According to AAA data, the national average diesel price stood at $6.52 per gallon on Wednesday—up 76% year-on-year. This surge occurs against the backdrop of U.S.-Iran tensions and the ongoing war in Ukraine, contributing to persistently tight global diesel supply. Skyrocketing fuel costs have drawn widespread complaints from farmers and other diesel users—and have evolved into a core political challenge for Republicans. U.S. Agriculture Secretary Brooke Rollins has raised the issue of high diesel prices directly with the President; Republican lawmakers representing highly competitive districts have likewise ramped up pressure, demanding government action. A White House official said Trump “wants to see fuel prices fall and is evaluating all possible options.” U.S. Energy Secretary: The ban would backfire Chris Wright’s opposition to the ban targets the policy’s fundamental contradiction head-on. He explained that if diesel exports were prohibited, refiners would quickly run out of storage capacity—forcing them to reduce overall refining output. The result would be lower gasoline and jet fuel production, ultimately raising consumer prices across the board. TACenergy analysts echoed this view in a report issued Wednesday: “Losing the export outlet would compel many refiners to cut operating rates, reducing output of gasoline and other products—and the ultimate outcome would be counterproductive.” According to data from the U.S. Energy Information Administration (EIA), U.S. refinery utilization last week stood at approximately 94% of capacity. Wright said the administration is pursuing “simpler, voluntary, collaborative approaches” with the refining industry to boost domestic diesel supply—avoiding the use of a “blunt instrument” that would compress refining capacity. However, he declined to disclose specifics of any proposed measures and emphasized no decisions have yet been made.

US Energy Department Collaborates with Refiners to Boost Diesel Output

13 hours ago

Amid soaring diesel prices linked to global conflicts, the US Energy Department is partnering with refiners to increase throughput while the IEA coordinates emergency stockpile releases totaling 50 million barrels.

reuters

2026-10-20

US Energy Department Collaborates with Refiners to Boost Diesel Output

US Energy Department Collaborates with Refiners to Boost Diesel Output

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