Goldman Sachs Flags Global Diesel Crunch as North American Refiners Hold Advantage
War-related outages have slashed global diesel exports by 35%, giving North American refiners a product-margin window as US EV policy reversals support domestic fuel demand.
Goldman Sachs said on Thursday (2026-07-30) that global diesel exports have dropped roughly 35%, or 2.6 million barrels per day, so far in July — the bank describing the diesel squeeze as the biggest threat in oil markets amid the lowest global refining activity for this time of year since the 2020 pandemic.5
The throughput collapse is concentrated outside North America. Global refining runs have slumped by as much as 6.5 million barrels per day compared with July 2025, Goldman estimates, with lower Chinese run rates compounding war-related outages in the Middle East and Russia. North American plants have been spared the direct disruption, positioning the continent's refiners as marginal suppliers to a product market running on fumes.5,6
Since the outbreak of the Israel-Iran conflict, observable global oil stocks have fallen by a cumulative 246 million barrels, OGJ reported on June 8 (2026-06-08), including a 129 million-barrel draw in March and another 117 million-barrel decline in April, equivalent to roughly 3.9 million barrels per day. Some of those barrels remain stranded in Gulf storage facilities, reducing their effective availability.3
European diesel markets were already heading toward multi-year inventory lows as of mid-July (2026-07-20), according to Morgan Stanley analysts, who described the supply picture as "genuinely tight." Multiple simultaneous disruptions were cited. NYMEX heating oil front-month settled at $4.09 a gallon on Friday (2026-07-31), well above the levels typical of a loosening market.4
ICE Brent crude front-month settled at $91.04 a barrel at Friday's (2026-07-31) close; NYMEX WTI front-month settled at $86.80. The $4.24 discount for WTI has not compressed significantly despite the global product squeeze, suggesting North American crude supply is ample even as refined products tighten elsewhere. NYMEX RBOB gasoline front-month settled at $3.17 a gallon at the same close.5
The policy backdrop on the demand side diverges sharply by region. The International Energy Agency, in its May (2026-05-20) Global EV Outlook, projected global electric vehicle sales will reach roughly 23 million units in 2026, nearly 30% of all new car sales, following a year in which global EV sales jumped 20% to top 20 million vehicles. But sales fell 8% in the first quarter of 2026 following policy shifts in China and the United States, the IEA noted.1
US policy reversals on electric vehicles carry a direct consequence for gasoline demand. Chinese automakers supplied roughly 60% of the 20-plus million EVs sold globally in 2025, while North American and European manufacturers each accounted for about 15% of sales. With Washington pulling back on EV incentives, the displacement of petrol-powered vehicles slows, supporting domestic refinery runs for longer than would otherwise be the case.1
The Hormuz disruption has simultaneously strengthened North America's position in LNG markets. Morningstar DBRS analysts, speaking at the firm's Credit Insights Calgary conference in June (2026-06-04), said energy security considerations are increasingly overriding cost in LNG procurement — a trend favoring North American export capacity. JKM Asian LNG front-month settled at $21.45 per MMBtu at Friday's (2026-07-31) close, sustaining the premium that has underpinned demand for non-Hormuz supply routes since the conflict began.2
How long North American refiners hold their product-margin advantage hinges on two variables: the pace at which OPEC members restore barrels lost to the conflict, and whether Chinese refinery utilization rebounds through the second half of 2026. If Chinese runs recover faster than the market expects, the diesel squeeze could ease before North American plants have fully monetized their position.5,3