HO HO=F US diesel · ULSD futures · USD/gallon NY Harbor ULSD Futures Loading... : Investor Sentiment and Bull/Bear Views

Tom Kloza is bullish on diesel/distillate because the world has lost roughly 7 million barrels a day of refining capacity, mainly from drone attacks in Russia, the Persian Gulf, and the Red Sea, leaving the product market short just as diesel enters seasonal demand. He says refinery outages face zero tolerance, diesel is the most-used refined product, European diesel is also used for home heating, and the market is untethered; he thinks $6.47 could later be remembered as low. He sees policy talk about EU windfall-profit taxes or export curbs as a possible risk that could spook speculative long positions in gas oil and ULSD futures.

Diesel is the end product reflecting simultaneous problems in crude, shipping, and refining. It is already at all-time record highs around $200 per barrel in Europe and $220 in the U.S., and as crude tightens its share of the diesel price should expand.

Oil is the last major macro risk. If oil stabilizes or falls, many market concerns ease; if it stays high long enough, it can feed inflation expectations and force more tightening. Watch crude and diesel prices closely.

O diesel está ainda mais estressado que o petróleo: a Ucrânia atingiu refino e transporte na Rússia, que suspendeu exportações, e o Brasil perdeu o diesel russo com desconto, recorrendo aos EUA. A demanda americana por diesel é forte, a capacidade de refino está em 97,5% (máxima desde 2018) e não há capacidade ociosa global, o que mantém forte pressão de alta nos preços do diesel.

Record diesel prices are driven by constrained fossil-fuel infrastructure and permitting rather than just the war. The Oklahoma-to-California diesel spread of about $3/gallon reflects California's refusal to support fossil-fuel infrastructure and its taxation, and lack of adequate infrastructure leaves energy prices vulnerable to supply shocks like the Saudi pipeline attack.

Gasoline is not following its normal fall seasonal decline because oil is up about $30 from early last month, and diesel at a record $6.40 a gallon is already an inflation driver; with more than 90% of U.S. groceries moved by 18-wheelers, that higher diesel cost is being passed into groceries, agriculture, construction, and manufacturing and will continue to pressure prices.

Oil is up about $30 since early last month, feeding into pump prices. Gasoline is not falling as it normally does after summer driving season, and diesel is at another record high, up 9 cents overnight to $6.40 a gallon. Because 90% of groceries move by 18-wheeler and diesel is used in agriculture, construction, and manufacturing, those higher costs are already showing up in grocery prices and will continue to pass through, keeping inflation pressure elevated.

Dudley flags the war in Iran and the uptick in oil prices, especially diesel, as an inflation risk that raises the stakes for the Fed to hike. Diesel price increases matter because they pass through into airfares, food prices, and broader transportation costs, so they will filter from headline inflation into core inflation.

Ukrainian attacks on Russian refineries and the halt in Russian diesel exports are draining reserves and adding to global refined-product tightness, keeping diesel prices and refining margins elevated.

Diesel is the real pressure point: Middle East product exports are constrained, global refinery runs have been dialed back, and Russia's diesel export ban after Ukrainian drone strikes removes the second-largest global exporter. Diesel prices are already at record levels and rallying, and Smith says this imbalance does not get fixed easily.

Diesel is less elastic than gasoline, US refiners are running at 98% utilization, Middle East war and Ukraine attacks on Russian refining reduce refined product supply, and export bans would be counterproductive. Diesel prices are therefore sticky/supported and a persistent inflation source the Fed cannot control.

Diesel affordability is already severe because of the Iran war. Blinken cites a driver paying twice as much to fill a diesel tank and says margins are impossible, so restoring shipping and controlling oil prices would relieve the diesel squeeze.

Oil has moved back above $100, with WTI at $106 and Brent higher, diesel about $8 nationwide, and global oil reserves and SPR buffers low; he does not see the energy price shock going away and expects it to feed inflation and inflation psychology.

The real problem for diesel is a lack of spare refinery capacity. There is crude oil available, but refineries in the Middle East have been targeted in the Iran war, product is not getting out of the Strait of Hormuz, and Ukraine continues to target Russian refineries. This refinery shortage is profoundly impacting diesel prices.

Diesel prices hit an all-time high in early September and diesel powers trucks, ships, trains, and agricultural equipment. Because diesel is a key transport and farming input, higher diesel costs for truckers and farmers can pass through the supply chain and make groceries and other consumer goods more expensive.

The East-West pipeline shutdown cuts crude feed to Red Sea refineries, European refiners cannot compensate, the global refining system is stretched, and Russian supply losses have driven diesel prices nearly double crude, while Gulf jet fuel shipments to Europe are also disrupted.

Global distillate markets are at historic tank-bottom inventories with essentially no marginal supply. Russia has banned diesel exports, Europe's coming cutoff of Russian gas/LNG adds distillate tightness, harvest demand is mandatory and price-inelastic, and AI/data-center construction plus backup generation is increasing diesel use. Jet fuel demand is also price-inelastic, with prices up sharply but demand still rising. Paul expects distillate prices to stay high or go higher, with another 20-30% upside, especially in a cold winter.

Richards argues the Iran war and Strait of Hormuz disruption are keeping energy prices elevated. She says SPR releases or a diesel export ban are only Band-Aid fixes because oil, diesel, natural gas, and other petroleum products trade in global markets, and slightly more US supply cannot offset the Middle East shock. She expects those price pressures to persist rather than be fixed by policy.

Record diesel prices and midterm election pressure could push policymakers to ban diesel exports. While an export ban would keep domestic prices lower, it would create negative externalities for Europe and other trade partners, making the policy risk worth monitoring for diesel markets.

Refining capacity is a bigger challenge than crude supply right now. Refining has been taken offline in the Middle East and Russia, and California has closed two major refineries, tightening diesel supply and supporting record-high diesel prices. The world needs growing, not shrinking, refining capacity.

Drone warfare in the Russia-Ukraine war has hurt Russia's ability to make fuel, and Russia is a major diesel supplier to the global market, feeding into higher refined product prices. Ukraine is reluctant to stop a key strategic lever, so pressure on diesel and energy is likely to persist and hurt trucking and farming.

Russian diesel export disruptions from tit-for-tat attacks are the key energy market issue. If Ukraine halts drone attacks on refineries, more diesel could enter the international market and lower prices; if attacks continue, there may be no relief and prices could rise, especially with winter demand and utilities switching from high natural gas to diesel.

Blanch expects diesel prices to stay very high because refining capacity has been damaged or constrained in Russia/Ukraine and the Middle East, Russia has restricted fuel exports, China is struggling to source crude, and only US refiners are running at exceptionally high levels to supply incremental diesel and gasoline. He thinks refining margins stay high for a while and some refinery damage may be permanent or take months to repair.

Yoon notes US diesel prices are at record highs because Ukrainian drone attacks on Russian refineries have reduced Russian refining, forcing Europe to source diesel from the US and tightening US diesel supply. If the US bans petroleum product exports due to domestic shortages, diesel could spike further. This is a bullish tightness thesis for diesel.

Saudi Arabia's pipeline closure reportedly removes up to 7 million barrels per day of transport infrastructure for as long as five weeks, pushing Brent above $105 and WTI above $100, with forecasts of Brent up to $125 and additional seasonal European diesel demand adding to the bullish oil setup.

Diesel prices are being driven higher by multiple supply shocks: the Saudi East-West pipeline shutdown and Red Sea/Houthi threats are reducing product flows out of the Persian Gulf, attacks on Russian refining have contributed 40-50% of lost traded diesel, global stockpiles are depleted, and China is refining less. With the U.S. now the world's largest diesel exporter, domestic prices face building upward pressure.

He expects a stalemate in negotiations over passage through the Strait of Hormuz because Iran wants significant control and Saudi Arabia and others will not allow it. This will keep supply risk elevated and lead to a run-up in diesel and other refined product prices.

The oil market is extremely tight because Saudi Arabia's pipeline shutdown and the closure of the Strait of Hormuz are blocking a key export route for an anchor supplier that is producing only 6.3 million barrels a day. US diesel above $6 per gallon and gasoline above $4 per gallon show the product tightness, demand remains inelastic with little demand destruction, and Russian supply disruptions add another bullish pressure. Prices should stay elevated until flows out of the Middle East improve.

Diesel prices will continue to rise because Russia and Ukraine are unlikely to stop striking each other's energy facilities, and diesel is critical for farm equipment and trucking, feeding into higher goods prices.

The refined product side, especially diesel, is tighter than crude. Diesel faces a global squeeze from a relative shortage of refining capacity for middle distillates, higher demand for agriculture and industry, and fewer refineries able to process middle distillates than gasoline or jet fuel. Gasoline will rise much more slowly than diesel, so diesel prices should remain under pressure.