Petroleum Product Prices
Recent increases in U.S. fuel prices have prompted a range of political statements from different perspectives.
However, fuel prices, and diesel prices in particular, are affected by a wide range of factors. It is difficult to determine the precise contribution of each one. Nevertheless, it is possible to identify the main drivers, assess their relative importance, and explain the causes of price changes at a qualitative level.
This assessment uses data from the OPEC Monthly Oil Market Report, one of the most timely publicly available sources on the oil and petroleum products market.
Crude Oil Prices
The price of crude oil is the main component of petroleum product prices. While WTI averaged around $64 per barrel in August 2025, it was around $83 per barrel in August 2026, nearly 30% higher. One of the main drivers of higher oil prices has been the war in the Persian Gulf and the associated risks to oil production, transportation, and refining.
Global oil demand amounted to 104.3 million barrels per day in the second quarter of 2025 and 102.92 million barrels per day in the second quarter of 2026. Demand therefore declined slightly. However, this decline was insufficient to offset the much larger reduction in available supply, falling inventories and refined-product output, as well as higher logistics and insurance costs.
Production of liquid hydrocarbons in countries outside the OPEC+ Declaration of Cooperation, or DoC, amounted to 54.38 million barrels per day in the second quarter of 2025 and 54.24 million barrels per day in the second quarter of 2026. It therefore changed very little. At the same time, crude oil production by DoC countries fell from 41.3 million barrels per day in August 2025 to 34.3 million barrels per day in the second quarter of 2026, a decline of roughly 7 million barrels per day.
The largest reduction occurred among OPEC countries, especially Saudi Arabia, Iran, Iraq, and Kuwait. At the same time, DoC production quotas were being increased. This indicates that the production decline was not caused by quota restrictions, but by physical disruptions: risks to exports through the Strait of Hormuz, limited storage capacity, and damage to energy infrastructure.
Ukrainian strikes on Russian refineries do not primarily reduce crude oil production. On the contrary, in the short term they may increase the amount of crude available for export, because some oil cannot be processed domestically. Strikes on export infrastructure—ports, pipelines, and storage facilities—can temporarily reduce crude exports. Their long-term impact depends on the scale of the damage, the speed of repairs, and the ability to redirect flows through alternative routes.
Russia exported around 3.2 million barrels per day of crude oil in January 2026. In July 2026, exports exceeded 4.3 million barrels per day during certain periods.
Refining Margins
The next important component of petroleum product prices is the gross refining margin. This is neither a refinery processing fee nor a refiner’s net profit. It represents the difference between the weighted value of petroleum products obtained from a typical barrel of crude and the price of the crude oil itself.
In previous years, this margin in the United States was typically around $12–18 per barrel. In August 2026, the gross refining margin on the U.S. Gulf Coast relative to WTI rose to $53.34 per barrel. The margin is distributed unevenly across products.
Fuel oil traded below WTI in August. At the same time, the difference between the price of 93-octane gasoline and WTI was $66.01 per barrel, although it declined slightly during the month. For diesel, the differential continued to rise and reached $75.76 per barrel.
The increase in refining margins is explained not simply by a shortage of global refining capacity, but by a shortage of available refining capacity and finished petroleum products in the required regions and specifications. Some refineries have been damaged, some lack sufficient feedstock, and others are operating at reduced rates.
U.S. refinery utilization reached 97.2% of capacity in August 2026. Utilization also increased in Europe and selected Asian countries, but remained lower, at about 90% and 85%, respectively.
According to OPEC’s September estimate for the third quarter of 2026, refinery throughput in the United States and Europe changed little compared with the same quarter of 2025. In OECD Asia-Pacific countries, it declined by 0.34 million barrels per day.
The largest decline in refining occurred in China, where throughput fell by 1.79 million barrels per day. This was driven by a combination of disruptions to crude supply through the Strait of Hormuz, high feedstock costs and logistics risks, weak domestic demand for transport fuels, and Chinese government restrictions on petroleum product exports.
During the first months of the crisis, China drew on crude inventories while reducing refinery utilization and exports of finished fuels. In July and August, after export restrictions were eased, Chinese petroleum product shipments began to recover rapidly. This partly eased shortages in Asia, but did not offset lost output in Russia and the Persian Gulf countries.
In the Middle East, refinery throughput fell by 1.13 million barrels per day in the third quarter. There were two main reasons. First, restrictions on shipping through the Strait of Hormuz complicated not only crude oil exports but also the transport of finished petroleum products. Second, attacks on refineries in the Gulf countries reduced available refining capacity.
Since the start of the war, refineries in Saudi Arabia—Ras Tanura, Jazan, SAMREF, and SATORP—have been attacked or damaged. Other affected facilities include Ruwais in the UAE, Mina al-Ahmadi and Mina Abdullah in Kuwait, and Sitra in Bahrain. Some of these refineries have fully or partially resumed operations. Ruwais has returned to full capacity, while Ras Tanura resumed operations after a temporary shutdown. Jazan remains offline, and there is no reliable public confirmation that several other facilities have fully recovered.
Russia reduced refinery throughput by 1.13 million barrels per day as a result of Ukrainian attacks on Russian refineries. Thus, the Russian factor accounts for about one-quarter of the global refinery-throughput decline of 4.39 million barrels per day.
However, Russia’s importance for the diesel market may be greater than this share suggests. Russia was one of the world’s largest exporters of diesel and gasoil. Therefore, lower Russian refining throughput and export restrictions have a particularly strong impact on the market for middle distillates, including diesel and jet fuel.
A further driver of higher U.S. refining margins is export demand. In August, wholesale diesel and gasoline prices in Europe were higher than on the U.S. Gulf Coast. However, these prices cannot be directly compared as a net export margin: products have different specifications, and freight, insurance, storage, and possible additional processing costs must also be considered.
For example, the price difference for jet fuel between Rotterdam and the U.S. Gulf Coast was about $6 per barrel. For diesel, it reached about $14 per barrel. However, U.S. gasoil in these statistics has a sulfur content of 0.2%, while European diesel meets a 10-parts-per-million sulfur standard. Therefore, the difference in quotations is not equal to a net delivery margin: it depends on the possibility of additional treatment or blending, as well as transportation and insurance costs.
Lower refinery throughput in China, Russia, and the Middle East raises petroleum product prices worldwide. U.S. refineries cannot quickly increase output substantially because they are already operating close to maximum capacity. At high utilization rates, additional export demand competes with the domestic market for limited volumes of petroleum products, supporting fuel prices in the United States.
This challenges the view that a blockade of the Strait of Hormuz is a problem only for Europe and Asia, while the United States can fully shield itself through domestic oil and gas production. The U.S. market remains closely linked to global markets through prices and petroleum product exports. The United States is better supplied with domestic oil than importing countries, but this does not insulate its domestic fuel prices from global shortages of crude oil and petroleum products.
Conclusion
Lower Russian refinery throughput and diesel exports are among several factors raising petroleum product prices. However, the war involving Iran has the greatest systemic importance: it has simultaneously restricted transit through the Persian Gulf, damaged refineries and reduced refinery utilization in Gulf countries, and affected refinery throughput in China.
Материал доступен на русском языке: Чаму даражэе дызель: глабальны шок на рынках нафты, перапрацоўкі і гандлю
