Goldman Sachs Warns Diesel Shortage Now Outweighs Crude Volatility in Global Oil Markets

Key points

• Global refining throughput fell by 6.5 million barrels per day in July 2026 compared to the same month in 2025, marking the lowest activity for this period since the 2020 pandemic.
• Diesel exports declined by approximately 35%, or 2.6 million barrels per day, as war-related disruptions in the Middle East and Russia collapsed supply.
• Increased output in the Americas and Africa has only offset about one-third of the lost global fuel supply, leaving inventories below seasonal averages.
• Refining margins have reached record highs despite crude oil prices soaring to $100 per barrel, indicating that refined product supply is significantly tighter than crude supply.
• The International Energy Agency confirmed that refinery activity has not recovered as quickly as crude deliveries, making markets for diesel and gasoline considerably tighter than those for crude oil.

Background

This development follows recent disruptions to oil flows through the Strait of Hormuz, where shipments dropped to 3–5 million barrels per day due to renewed US-Iran conflict. Earlier reports indicated that while flows briefly recovered to 60% of pre-war levels, ongoing geopolitical tensions have kept supply risks elevated, contributing to the current tightening of refined product markets.

Why it matters

The shift from crude to refined product scarcity signals a structural change in oil market dynamics, where geopolitical conflicts directly impact downstream supply rather than just upstream production. This could lead to sustained high prices for transportation fuels and increased volatility for industries dependent on diesel, despite fluctuations in crude oil prices.

What to watch

Monitor for further refinery outages in the Middle East and Russia, as well as any potential increases in refining capacity in the Americas and Africa that could offset current supply gaps. Watch for changes in diesel inventories and refining margins in the coming months to assess the severity of the fuel crunch.