Goldman Sachs Says Diesel Crunch Is Now Oil Markets’ Biggest Threat

Goldman Sachs diesel analysis points to a tightening fuel market, as refinery outages and weaker processing cut supply faster than new production can replace it. Global diesel exports fell about 35% in July, and inventories are below seasonal norms, leaving the market exposed to further disruption.

Goldman Sachs diesel warning centers on refinery losses

Goldman Sachs analysts say diesel is at the heart of the current fuel shortage. Refining activity worldwide has reached its lowest level for this time of year since the 2020 pandemic, with outages linked to wars in the Middle East and Russia sharply reducing output.

In July, global refinery throughput fell by as much as 6.5 million barrels per day compared with July 2025. Lower processing rates in China added to the decline. Goldman Sachs estimates diesel exports dropped about 2.6 million barrels per day this month, a fall of roughly 35%.

New production replaces only part of lost supply

Higher output in the Americas and Africa has replaced only about one third of the supply lost to refinery outages, according to the analysts. That gap has kept middle distillate markets tight, with inventories sitting below their seasonal average.

Low stocks leave less room to absorb another disruption. If refinery operations are further constrained, diesel and other refined fuels could face an even tighter supply balance. The pressure is not limited to diesel: Goldman Sachs says gasoline and jet fuel supplies have also been tightening.

Crude and refined fuels show different pressures

Refining margins have held at record highs even as crude prices rose to $100 per barrel last week. That contrast reflects tighter availability of finished fuels than of crude oil itself. International Energy Agency executive director Fatih Birol said refinery activity and product supplies had not increased in step with crude deliveries, leaving refined fuel markets considerably tighter.

The supplied material does not include a USO quote, the ETF proxy for crude oil, or a diesel price. It also gives no dollar data, so the reported shortage cannot be tied to a currency move here. The clearest drivers in the available figures are refinery outages, reduced processing and low inventories.

Can refinery output catch up with fuel demand?

The key uncertainty is whether operations recover enough to rebuild product stocks. For now, extra production from the Americas and Africa has covered only a fraction of the disruption, while the diesel export decline underscores how little slack remains in supply.