Global distillate fuel supplies are constrained due to lost production from refineries in the Middle East, Russia and China. This reduction has driven up international prices, leading to increasing costs of importing diesel to the U.S. and the demand for U.S. diesel exports.

Targeted Ukrainian drone strikes on Russian refineries have severely curtailed the country's oil infrastructure, eroding its 6.5 million barrels per day of refining capacity. Refinery throughput in June plunged 30% year-over-year to a two-decade low of 3.8 million barrels per day, according to the International Energy Agency. With gasoline and diesel output decreasing 20% and nearly 30% respectively from 2025, the government has turned to fuel export restrictions to safeguard domestic supplies.

U.S. retail diesel prices soared to $6.53 per gallon in the week ending  September 21, 2026, compared to $3.75 per gallon the year prior. The diesel crack spread, which represents the price of New York Harbor ultra-low-sulfur diesel minus the price of crude oil, reached a record surging past $100 per barrel. This significant margin has prompted refiners to prioritize middle distillate production over gasoline output.

This demand shock is being felt far beyond the energy sector. Because diesel powers the global economy, these price spikes directly impact commercial participants across agriculture, construction and retail. Farming operations face soaring fuel costs during the harvest season, while trucking and freight companies will likely have no choice but to pass these expenses on to consumers. With winter quickly approaching across the U.S. Northeast and Europe, the seasonal surge in heating oil demand will directly compete with these sectors for the same limited supply of middle distillates.

The Trump administration has sought to increase the nation's fuel-making capacity and is reportedly considering a 90-day ban on diesel exports. The potential proposal has sparked debate, drawing pushback from the energy industry, with the November midterm elections around the corner.

Historically, Latin America has been the primary destination for U.S. refined product exports. While Mexico, Chile and Brazil continue to absorb substantial volumes of gasoline and diesel to meet domestic consumption, current supply constraints are forcing a wider distribution. Both Europe and Asia have increased their diesel imports from the U.S. According to Vortexa data, U.S. diesel exports to Europe more than doubled in early 2026, increasing from 167,000 barrels per day to 396,000 barrels per day, surpassing South America as the largest buyer at certain times.

Until the logistical backlog clears, the U.S. will remain a crucial supplier to international buyers. Diesel prices are expected to remain elevated as the winter heating season approaches, driven by increased demand for heating fuels and historically tight inventories.