Diesel Crack Spreads Hit Record Above $100 a Barrel as War-Driven Refinery Losses Deepen
War-induced refinery destruction in the Middle East and Russia has cut global diesel exports 35%, driving crack spreads to all-time highs that Goldman Sachs flagged months ago.
The US diesel crack spread surpassed $100 a barrel as of August 19 (2026-08-19), setting an all-time high as war-related refinery outages across the Middle East and Russia stripped the market of supply faster than any alternative source could compensate, Rigzone reported.7
Goldman Sachs had been tracking the deterioration for months. In a note from early June (2026-06-02), the bank's commodity analysts estimated that global refined product exports had already fallen 4 million barrels a day from pre-war levels, with Middle East output alone down 2.5 million barrels daily. Diesel margins, they wrote, were running $19 to $26 a barrel above pre-March levels, with refining margins overall two to three times higher than the 2013-to-2019 average.1
Actual outcomes have since run well past those estimates. By late July (2026-07-30), Goldman calculated that global refining throughput had slumped by as much as 6.5 million barrels a day from July 2025 levels — the lowest for this time of year since 2020 — and diesel exports had dropped 35%, or 2.6 million barrels a day, Goldman Sachs estimates showed.5
The physical market has been equally unambiguous. Wholesale diesel hit $180 a barrel by mid-August (2026-08-12), with Gulf Oil's Tom Kloza warning that an active Gulf of Mexico hurricane season could push prices past $200. He described such a scenario as producing "apocalyptic numbers."6
US refiners are extracting every barrel they can but cannot bridge the global shortfall alone. Domestic refinery output is capped near 5.3 million barrels a day, and with margins running roughly $90 above crude costs — ICE Brent front-month was at $91.25 a barrel early on September 1 (2026-09-01) — every incentive to maximise runs already exists.6
The export data shows where the supply is going. For the week of August 3 (2026-08-03), Energy Department figures showed the US shipped nearly 2 million barrels of distillate — a record — while domestic consumption ran close to 3.5 million barrels a day. Those two figures together already exceed the country's rated refinery cap of 5.3 million barrels a day, implying drawdowns that cannot be sustained indefinitely.6
The structural deficit extends well beyond any single region's output. Kloza estimated global refining capacity is short by 7 to 9 million barrels a day, a gap widened by Venezuela's long production decline and Latin America's growing dependence on US diesel supply. Russia has compounded the shortfall: Reuters estimated Russian diesel output fell 10% in May (2026-05) after a prior 10% drop in April (2026-04) following drone strikes on domestic refinery infrastructure.6,1
Goldman's crude outlook is sharply more dovish than its products view. By late June (2026-06-30), the bank cut its fourth-quarter 2026 Brent forecast to $80 a barrel from $90, projecting an eventual surplus of more than 3 million barrels a day as non-OPEC supply grows and Iran tensions ease. That divergence between falling crude expectations and soaring diesel prices is exactly what has pushed refiner margins to record territory.3,2
But the bank also sketched a crude upside scenario. In a July (2026-07-21) note, Goldman estimated ICE Brent front-month could exceed $120 a barrel next quarter and average above $100 next year if Strait of Hormuz disruptions persist. If crude moves sharply higher, some of the crack spread premium narrows from the input side even as the product shortage drags on.4
Even a Hormuz resolution may not quickly clear the product backlog. Goldman expects affected refinery flows to recover to only around 70% of pre-war levels — a partial restart that leaves the structural diesel deficit intact well into next year.3
Heating oil futures (HO=F) were trading at $4.44 a gallon as of September 1 (2026-09-01). Atlantic hurricane season and the pace of refinery reconstruction in the Middle East and Russia are now the two variables most capable of resetting crack spreads dramatically before year-end — and neither is close to resolved.6,7