Diesel Margins Rally as Russian Exports Plunge
Global diesel margins are surging to some of the highest levels seen over the past two years amid supply concerns caused by a combination of lower Russian volumes, new sanctions and refinery maintenance ahead of the colder weather season in the northern hemisphere.
In Northwest Europe (NWE), spot prices for ULSD cargoes rose Tuesday to $781/metric ton, according to OPIS data. This is the highest level since June, when front-month Brent futures were trading near $80/barrel. However, the crude oil benchmark is currently closer to $65/bbl, according to Intercontinental Exchange data.
Unlike previous spikes, the recent increase in diesel prices has been exclusively driven by downstream tightness. While crude is in ample supply, refinery throughput is not keeping up with product demand.
In the physical diesel market, the tightness has been primarily caused by a sharp reduction in Russia’s diesel exports. Ukraine this summer ramped up a military campaign against Russian oil infrastructure, using drones to target multiple refineries and export terminals.
This effort has proved successful. Russia’s diesel and gasoil exports have fallen to less than 3.0 million mt in September and October from monthly averages of around 4.0 million mt in the first half of 2025, according to data from shipping information provider Vortexa.
Moreover, exports are now further constrained by U.S. sanctions on Lukoil and Rosneft, the two largest oil companies in Russia, which are kicking in on Nov. 21.
As a result, global product supplies are tightening significantly in the Atlantic basin, with the usual buyers of Russian diesel now having to compete for non-sanctioned barrels elsewhere.
Brazil, a country that received nearly 1 million mt of Russian diesel both in March and April, is a good example. This month, imports from Russia will plunge to just over 0.2 million mt, prompting Brazilian buyers to secure almost 1.1 million mt from the U.S. Gulf Coast and India – barrels which otherwise would have likely gone to Europe.
Tightening the screw still further, the refinery maintenance season is weighing on the overall availability of oil products globally. In the U.S., the world’s largest refiner, processing rates have dropped to 15.6 million b/d from summer highs of 17.5 million b/d.
In the Middle East, refinery downtime has been exacerbated by a fire at the 615,000 b/d Al Zour refinery in Kuwait. Two of its three crude distillation units are down, with the outage likely to extend into December, according to reports from Energy Intelligence.
Exports of middle distillates, which include both diesel and jet fuel, from the Middle East plunged to an eight-month low of just 5.4 million mt in October.
As a result, Europe is scrambling to secure enough diesel supplies going into the winter season, when consumption tends to increase on the back of heating demand. In NWE, the diesel crack versus Brent has soared to $40/bbl, close to the highest levels seen since September 2023, according to OPIS pricing data.
–Reporting by Jaime Llinares Taboada, jllinares@opisnet.com; Editing by Rob Sheridan, rsheridan@opisnet.com