The global diesel shortage, expected to persist into 2027 according to the International Energy Agency (IEA), is driving record profits for Western refineries despite the broad economic challenges caused by soaring fuel costs. The diesel supply crunch stems from refinery disruptions in the Middle East and Russia, along with export restrictions from China.
The IEA warned that these supply constraints are raising the cost of goods, impacting inflation, and burdening sectors ranging from agriculture to logistics. However, some refiners, especially those in the US and Europe, are leveraging this crisis as a highly profitable opportunity.
Refinery Disruptions and Market Impact
Significant refinery damage in the Gulf region and Russia—a major diesel exporter—is offset by constrained fuel exports and shrinking global fuel stockpiles. As a result, diesel supplies have declined by approximately 1 million barrels per day compared to 2025 levels. This shortage pushes diesel prices to record highs, affecting businesses and consumers worldwide.
Refiners Profit from Market Imbalance
French energy company TotalEnergies highlighted the strategic advantage of integrating refining operations across Europe. Its refining and chemicals business income surged over fourfold to $1.8 billion between April and June, marking the company’s strongest quarterly profit in three years. Similarly, major U.S. refiners such as Marathon Petroleum, Valero Energy, and Phillips 66 have doubled their market value during the crisis, fueled by record fuel export volumes.
Shell also reported near record profits and projected refining margins nearly doubling to $42 per barrel in the third quarter, benefiting from the price gap between Brent crude stabilized near $100-$106 a barrel and elevated diesel prices.
Operational Flexibility and Supply Response
Refineries producing diesel and jet fuel have adapted to evolving demand patterns. BP’s leadership noted rapid shifts in production to supply diesel to Australia early in the crisis and increased jet fuel output in Europe ahead of summer travel demands. Recently, refineries have returned focus to maximizing diesel production amid heightened price pressures.
However, not all refiners share these gains. Those focusing on products like naphtha and gasoline face shrinking margins, with crack spreads in northwest Europe dropping sharply. The IEA cautioned that an eventual diesel surplus may emerge by early next year, potentially triggering a gasoline shortage if refineries reduce runs to cut losses.
Looking Ahead
The persistence of global diesel shortages and resultant high prices is expected to continue pressuring economies, increasing costs for goods and transportation. At the same time, refiners positioned to adapt production and navigate supply disruptions are poised to sustain unprecedented profitability amidst these market challenges.
