Diesel’s Record Run: Refining Drove It, Now Crude Is Catching Up

Updated Oct. 31, 2026, with October prices, inventories, refiner earnings, forecasts and Russia’s export-ban extension. When we published on Sept. 25, we wrote that crude was cheaper than in April. That is no longer true, so we changed the headline and opening. The September analysis below stands as the record of the run to the high.

Diesel averaged $6.352 a gallon on Oct. 26, according to the Energy Information Administration, about 18 cents below the record $6.529 set in the week of Sept. 21. AAA had it at $6.32 on Oct. 30. What has changed is the reason. Refining drove the climb to the record. Since then, crude has been catching up.

Physical Brent crude was $128.12 a barrel on Oct. 26, above its April average of $117.29. Over the same five weeks, the gap between crude and wholesale diesel narrowed from $2.27 a gallon to $1.78. At the September record, that gap explained about 52 percent of diesel’s rise since February and crude about 37 percent. By Oct. 26, those shares had nearly swapped.

We went through the government’s own price data, the major energy agencies’ latest reports, and eight months of reporting on the wars that have hit the world’s oil supply. The gap reflects what refining adds to the price, and the story behind it runs from the Strait of Hormuz to the Red Sea to refineries across Russia.

What we measured

A barrel holds 42 gallons. Dividing the price of a barrel of Brent crude by 42 gives the cost of the crude in each gallon. Subtracting that from the wholesale price of diesel leaves a rough measure of what refining adds. The industry calls this the crack spread.

We used EIA’s monthly averages for Brent crude, wholesale ultra-low-sulfur diesel in New York Harbor, and U.S. retail diesel. For the two most recent rows, we used EIA’s daily and weekly figures.

Period	Brent ($/bbl)	Crude cost per gallon	Wholesale diesel, NY Harbor	Gap over crude	Retail diesel
February 2026	$70.89	$1.69	$2.50	$0.81	$3.72
April 2026	$117.29	$2.79	$3.99	$1.20	$5.50
August 2026	$91.08	$2.17	$4.25	$2.08	$5.46
Sept. 22, 2026	$114.89	$2.74	$5.01	$2.27	$6.53
Oct. 26, 2026	$128.12	$3.05	$4.83	$1.78	$6.35

What the numbers show

The IEA uses February as its pre-war baseline. Between February and August, retail diesel rose $1.74 a gallon. The crude inside each gallon accounted for 48 cents of that. The gap between crude and wholesale diesel accounted for $1.27, about three-quarters of the increase.

The spring tells the story most plainly. Between April and August, the crude cost in a gallon fell 62 cents. If crude were setting the price, pump prices should have come down with it. They didn’t. Retail diesel averaged $5.50 in April and $5.46 in August, because the refining gap widened 88 cents over the same months and absorbed the entire drop in crude.

The week of the record followed the same pattern. On Sept. 22, retail diesel stood $2.81 above its February average. Crude explains about $1.05 of that, roughly 37 percent. The wider refining gap explains about $1.46, roughly 52 percent.

That didn’t make crude irrelevant. The crude in each gallon cost about 62 percent more than it did in February, and that was a real part of the bill. But over the same period, the gap between crude and diesel nearly tripled.

Gasoline makes a useful comparison. The same day, wholesale gasoline in New York Harbor traded at $3.55 a gallon, 82 cents above the crude cost. Diesel’s gap was nearly three times as large. To see why, you have to follow the barrels.

What changed in October

On Oct. 26, retail diesel stood $2.63 above its February average. Crude explained about $1.36 of that, roughly 52 percent. The refining gap explained about 97 cents, roughly 37 percent. A month earlier, those shares were close to reversed.

Three things keep that from settling the question. First, physical crude has pulled far away from futures. In its October report, the International Energy Agency put North Sea Dated around $134 a barrel and Brent futures around $107. That $27 difference is worth about 64 cents a gallon, and our table uses the higher physical price.

Second, pump prices are lagging. Wholesale diesel fell to $4.69 on Oct. 27, the latest EIA reading, while retail had yet to show a comparable drop. Third, diesel remains the outlier. That same day, wholesale gasoline traded at $2.82 a gallon, 11 cents below the cost of the crude in it. Diesel sold $1.76 above.

EIA’s own breakdown, which uses different inputs, shows how far refining’s share had climbed before October. Refining made up 25.3 percent of the retail diesel price in May and 40.3 percent in August, the latest month available. Crude’s share fell from 41.5 percent to 37.3 percent.

The money shows up in refiners’ results, at least in the United States. Valero posted its highest-ever quarterly profit, with a refining margin of $39.24 a barrel, up from $13.14 a year earlier, Reuters reported. Chevron’s refining profit rose to $4.9 billion from $1.1 billion, and Exxon’s reached about $7.2 billion, CNBC reported.

“Frankly, diesel is the key crunch point here because it is so critical to economic growth [with] very inelastic demand,” Exxon CEO Darren Woods told CNBC.

Not every refiner shares in that. The IEA said record freight and crude costs crushed margins in Europe and Asia, while discounted feedstocks pushed U.S. margins to new highs. A wide gap in New York Harbor doesn’t mean refiners everywhere are getting rich. Refiners buying expensive physical crude and paying record tanker rates absorb part of the squeeze themselves.

The hole in the world’s supply

The International Energy Agency’s September Oil Market Report, published Sept. 11, estimates that world oil supply will average 100.7 million barrels a day this year, 5.7 million less than in 2025. Global production fell to 100.1 million barrels a day in August. More than 10 million barrels a day of Gulf output remained shut in, the agency said, and it has pushed a full recovery of Middle East supply back to 2027.

The EIA’s September Short-Term Energy Outlook, released Sept. 9, arrives at a similar number from a different angle. It forecasts world production of petroleum and other liquids at 100.6 million barrels a day in 2026, down from 106.2 million in 2025, against consumption of 102.6 million.

The agency estimated that crude production shut-ins averaged 6.7 million barrels a day in August, up from 5.0 million in July. It assumed shut-ins would average 5.7 million in the fourth quarter, and that most production and trade would return to pre-conflict levels by the second quarter of 2027.

The world has been covering the gap from storage. The IEA said observed global inventories fell 95 million barrels in August alone, bringing the drawdown since February to 507 million barrels.

Saudi Arabia under fire

Saudi Arabia, OPEC’s largest exporter, has been hit from several directions at once. With flows through the Strait of Hormuz disrupted, the kingdom rerouted crude west through its East-West Pipeline to the Red Sea port of Yanbu. In late July, Yemen’s Houthis declared a blockade on Saudi Arabia, threatening ships using the Bab el-Mandeb, the strait at the Red Sea’s southern end.

The data firms tracking tankers did not agree on the damage. Kpler figures showed crude and condensate exports from Yanbu falling to between 2.4 million and 3 million barrels a day in the week of July 20, from 4.23 million the week before, Reuters reported. Vortexa put loadings at 3.8 million barrels a day and said about a third of the volume left on tankers with their transponders switched off.

The attacks reached Saudi refining, too. Aramco shut its 400,000-barrel-a-day Jazan refinery on July 27 after a Houthi strike damaged its gasification complex and tank farm, according to a note from industry monitor IIR reported by Reuters. After two more attacks, IIR said the restart had slipped to Aug. 30. Argus reported on Oct. 6 that Aramco had shut the refinery following a Houthi attack in early September. We found no report of a restart.

The IEA estimated that Saudi crude supply fell 2.3 million barrels a day in August, to 6 million, the lowest in more than three decades, Reuters reported. The agency cited attacks on shipping in the Bab el-Mandeb, on Jazan and near Yanbu, and drone strikes on the Abqaiq processing site by Iran-backed militias in Iraq. Saudi Arabia’s own report to OPEC was higher: 6.238 million barrels a day produced and 7.122 million supplied.

September brought more. NPR reported that a Sept. 8 wave of Houthi attacks ignited fires at Saudi oil facilities and wounded 73 people. On Sept. 14, the Saudi-led coalition said Houthi missiles and drones struck Khamis Mushait, Abha and Taif, injuring 13 civilians. In mid-September, drone attacks also shut the East-West Pipeline itself.

Saudi Arabia restarted the pipeline on Sept. 22, Reuters reported, citing sources briefed on the matter, and Bloomberg separately reported that the kingdom was running tests to bring the line back. The pipeline had been carrying about 4 million barrels a day, around 4 percent of global supply, to Yanbu.

It restarted at a low rate, and a security source told Reuters a full resumption could take weeks. Brent futures fell more than $2 on the news. The restart eases pressure on crude supply. It does nothing directly for the refining shortfall.

The line recovered within weeks. Saudi Arabia’s energy minister said on Oct. 6 that it was carrying about 5.8 million barrels a day, against 7 million of capacity, Argus reported. The IEA said Gulf crude exports rose to 13.9 million barrels a day in September, over 75 percent of pre-war levels. It also warned that renewed attacks leave the recovery fragile.

Russia’s refinery war

The second front is in Russia. Ukraine has spent the year striking Russian refineries with drones. The IEA said a Russian refinery was hit, on average, once every three days during the first eight months of 2026, according to the Kyiv Post’s account of the agency’s findings.

By mid-September, Reuters calculated from fuel-market data that three of Russia’s six largest diesel-producing refineries, which together make about half of Russia’s diesel, had cut or halted output. The Kyiv Post, reporting those figures, said the Kirishi refinery had shut completely and that the Volgograd and NORSI plants were running at about a quarter of capacity.

Russia has responded by keeping its fuel at home. When this piece first ran, reports conflicted on how long its diesel ban would last. The answer turned out to be that producers and resellers were on different clocks, Interfax reported: the ban on non-producers ran to Jan. 31, 2027, while the producer ban was renewed a month or so at a time. On Oct. 31, the government extended the producer ban to Jan. 31, 2027, too, Xinhua reported, citing a government statement.

The ban now has a large exception. After Presidents Vladimir Putin and Trump reached an agreement on Oct. 9 to supply Russian diesel to international markets, Russia began issuing export quotas. Two sources told Reuters that those quotas would quadruple from October levels to 2 million metric tons in November, or about 0.5 million barrels a day. The sources also said refinery utilization had risen 25 percent from the start of October. For scale, the IEA said losses from Russia and the Middle East cut diesel exports by 1.3 million barrels a day in September from a year earlier. Hydrocarbon Processing reported in September that Trump had publicly urged Ukraine to stop targeting Russian diesel infrastructure.

Where the refining capacity went

Put those fronts together and the diesel shortage comes into focus. The IEA said global refineries processed 81.4 million barrels a day in August, 4.2 million fewer than a year earlier. It forecast refinery runs averaging 81.5 million barrels a day this year, 2.6 million below 2025.

Much of what disappeared was diesel that other countries used to export. The IEA said net diesel and gasoil exports from Gulf countries averaged 390,000 barrels a day in August, just over a quarter of pre-war levels. Combined Gulf and Russian diesel exports were 1.6 million barrels a day lower than in February.

The agency reported that diesel prices passed $200 a barrel in early September, 94 percent above pre-war levels, while crude traded near $105, and that refinery margins in the Atlantic Basin had hit records.

The agency’s October report said prices had eased from those highs but “remain nearly double the price of crude oil and their pre-crisis levels.” It expects global refinery runs to hit a seasonal low of 81.3 million barrels a day in October and recover to 84.6 million by year-end. Global diesel exports in September were 700,000 barrels a day below a year earlier.

Wall Street expects the squeeze to last. Goldman Sachs more than doubled its 2027 forecast for diesel refining margins, to $63 a barrel in the United States and $49 in the European Union, up from $27 and $19, OilPrice.com reported.

According to that report, Goldman’s analysts said refinery outages were running about 60 percent above the seasonal average. This is a forecast, not a measurement, and it assumes a roughly even chance that current unplanned outages persist through next year.

Record U.S. crude, thin U.S. diesel

The United States is pumping more crude than ever. EIA’s weekly data put domestic production at 13.94 million barrels a day in the week ending Sept. 18, up from 13.50 million a year earlier. The agency forecasts a record 13.8 million barrels a day for 2026 and 14.3 million for 2027.

U.S. refineries are also running more crude than a year ago: 16.81 million barrels a day that week, compared with 16.48 million. Yet U.S. distillate stocks, which include diesel, stood at 107.4 million barrels, down from 123.0 million a year earlier. The EIA’s September outlook said global tightness had raised domestic prices and encouraged U.S. refiners to export more distillate.

It forecast that U.S. stocks would fall below 100 million barrels in September and stay below the five-year low through much of 2027. That drop has not happened. Stocks bottomed so far at 102.6 million barrels on Oct. 9 and stood at 102.8 million on Oct. 23, down from 112.2 million a year earlier.

That pull toward exports set off a debate in Washington in September. On Sept. 23, Politico reported that the administration was preparing a 90-day ban on diesel exports. A White House official denied it, Reuters reported. Energy Secretary Chris Wright said nobody was considering a flat ban, and that the discussion was about “the most efficient way to get more diesel into the United States of America.”

The pressure then moved abroad. On Oct. 2, G7 leaders agreed to release 100 million barrels of crude and refined fuel from emergency stocks. The United States had announced exchanges of 40 million barrels of crude from its Strategic Petroleum Reserve on Sept. 29. We found no announced U.S. export ban as of Oct. 31.

Who pays

Trucks carried about 72.7 percent of U.S. freight by weight in 2024, according to the American Trucking Associations. Most of those trucks run on diesel, so the refining gap shows up in freight costs regardless of where crude trades.

Farmers are paying it at harvest. The American Farm Bureau Federation reported that farm diesel cost $5.45 a gallon on Sept. 4, up from $3.02 a year earlier. The group noted that the U.S. Department of Agriculture forecasts farm fuel and oil expenses of about $22 billion this year, up nearly 29 percent from 2025.

Where you live matters, too. AAA’s state averages on Sept. 25 ranged from $5.92 a gallon in Texas to $8.44 in California. Washington was at $7.46, Hawaii at $7.19 and Oregon at $6.88.

EIA’s Oct. 26 survey showed the same divide by region, from $5.89 in the Lower Atlantic to $8.16 in California. Among the main regions, the Midwest had the largest weekly increase, up 13 cents to $6.48.

What the forecasters expect

The EIA’s September outlook expected Brent to average around $90 a barrel in the second half of 2026 and $74 in 2027. It forecast retail diesel at an average of $5.07 a gallon for 2026 and $4.40 for 2027, and gasoline at $3.84 and $3.35. It put its measure of the diesel crack spread at $1.57 a gallon in 2026 and $1.25 in 2027.

The EIA completed those forecasts on Sept. 3, before the attacks that shut the East-West Pipeline. Its October outlook, released Oct. 6, moved all of them up. It now expects Brent to average $105 in the fourth quarter, $96 for 2026 and $84 for 2027. Retail diesel is forecast at $5.19 for 2026 and $4.49 for 2027.

The EIA expects retail diesel to come down gradually after October as crude falls and inventories recover slightly, but to stay above $4 a gallon through 2027. It finished that outlook on Oct. 1, before the G7 release and the U.S.-Russia diesel deal. Physical Brent averaged about $125 between Oct. 5 and Oct. 27, well above its fourth-quarter forecast.

What’s confirmed and what’s still developing

Confirmed: The U.S. price, production and inventory figures come from EIA’s published data and AAA’s daily survey. The world supply, refinery and export figures are the IEA’s and EIA’s own published estimates. The pipeline restart has been reported by Reuters and Bloomberg, and the 5.8 million barrel figure comes from the Saudi energy minister. Refiner results come from company reports as carried by Reuters and CNBC. Russia’s Oct. 31 extension comes from a government statement reported by Xinhua.

Still developing: Russia’s November quotas rest on Reuters’ unnamed sources, and a government order setting them was expected in early November. Reuters’ sources also said the ban would run to the end of the year, a shorter date than the government announced. We found no report that Jazan has restarted. The war itself remains an open question, and EIA’s forecasts assume some easing that has not yet happened.

There’s also a timing effect at the pump. Retail prices trail wholesale prices. In September, wholesale diesel in New York Harbor fell from $5.34 on Sept. 15 to $5.01 on Sept. 22, according to EIA data, while retail rose 24 cents. Wholesale fell again from $5.28 on Oct. 22 to $4.69 on Oct. 27, so the Oct. 26 retail price may overstate current pressure.

How we did the math

Our figures use EIA’s spot price for physical Brent crude. That price has traded well above Brent futures since September, so our crude cost per gallon is on the high side. Using the lower futures price would make the refining gap larger, not smaller. The calculation treats the whole gap as refining. In practice, it also includes some shipping and blending costs.

The shares we calculate compare changes since February. They don’t add up to 100 percent because retail prices also include distribution, marketing and taxes, and because pump prices lag wholesale prices.

EIA publishes its own monthly breakdown of the retail diesel price using different inputs. For August, the latest month available, it attributed 37.3 percent to crude, 40.3 percent to refining, 11.4 percent to distribution and marketing, and 11 percent to taxes.

What we’re watching: EIA’s Nov. 3 retail and Nov. 4 inventory and spot data, its Nov. 10 Short-Term Energy Outlook, the IEA’s November Oil Market Report, Russia’s November quota order, and whether physical crude stays this far above futures.