Goldman Backs Gasoline Over Diesel as Refiners Squeeze Lighter Fuel Supply
Refiners chasing distillate margins have crowded out gasoline output; Goldman now sees more price upside in gasoline than in diesel.
Goldman Sachs rotated its top refined-fuel trade from diesel to gasoline on Thursday (2026-09-17), telling clients the lighter product now offers "more upside price opportunities" even as diesel prices keep climbing.6
The context matters. U.S. diesel averaged $6.00 per gallon for the first time on record, according to GasBuddy data published on Thursday (2026-09-10), and the national average stood at $5.78 on Thursday (2026-09-03) — a gain of more than 53% from the $3.76 per gallon baseline recorded just before the Iran war began in late February, per NBC News. Most positioning reflects that surge. Goldman is framing the next trade differently.3,2
The bank's logic starts at the refinery gate. Goldman had more than doubled its distillate cracking profit forecasts by end-August (2026-08-31), and with margins at record levels, refiners have tilted run rates heavily toward middle-distillate output. That choice compresses gasoline yields from the same crude barrel. Gasoline tightness, in this reading, is a consequence of diesel's success rather than an independent development with its own supply story.1,6
Product export data from the Persian Gulf reinforces this picture. Goldman analysts said crude shipments from the region had recovered to between 70% and 80% of pre-war volumes, but product exports — including diesel, jet fuel and gasoline — remained at only 40%. ING's commodities team put Persian Gulf crude export recovery closer to 50% of pre-war rates. The gap between crude and product recovery underpins both the diesel and gasoline supply squeeze, and it has not narrowed.1,2
Crude markets sent a divergent signal on Wednesday (2026-09-16). ICE Brent front-month fell $2.92, or 2.7%, to settle at $105.83 per barrel, and NYMEX WTI front-month fell 3.2% to settle at $102.43, after Saudi Arabia was reported to be offering additional crude cargoes via Oman. EIA inventory data released in the same session showed U.S. crude stocks fell only about 640,000 barrels in the week of September 7 (2026-09-07), well short of the 1.62 million barrel draw anticipated in a Reuters poll of analysts.5
Both developments pointed toward crude relief. But products did not follow. Europe has lost substantial diesel and jet fuel supply from the Middle East, Citi noted, while disruptions at major Russian refineries have deepened the shortfall. Citi expects the Strait of Hormuz to reopen in the fourth quarter of 2026, providing a ceiling for the crude rally, but product shortages tied to refinery outages may outlast any shipping constraint.5
That split between crude and product relief is where Goldman's gasoline trade sits. ICE Brent front-month was near $100.58 per barrel as of Tuesday (2026-09-22), below the Wednesday (2026-09-16) settlement of $105.83. Front-month gasoline futures stood at $3.46 per gallon as of Tuesday (2026-09-22). If crude softens further while refinery run patterns stay tilted toward diesel, the gasoline supply shortfall deepens even as the headline crude number falls — a dynamic flat-price traders anchored to oil benchmarks may not fully price in.6,5
JPMorgan analysts said on Wednesday (2026-09-16) that diesel powers freight and heavy equipment, meaning elevated prices ripple into the cost of goods across the economy. That pressure on industrial operating costs is real and may begin to erode diesel demand before it noticeably dents gasoline consumption, where discretionary driving pulls back more slowly at elevated price levels.4
Heating oil futures held at $4.88 per gallon as of Tuesday (2026-09-22). The risk to Goldman's gasoline call is straightforward: a Hormuz reopening earlier than Citi's fourth-quarter projection, faster-than-expected recovery in Persian Gulf product shipments, or a broad crude selloff compressing cracking economics would each undercut the thesis. Persian Gulf product export volumes are what settles it — specifically, how quickly they close the gap with the 70-80% crude recovery rate Goldman cited.5,6