Military Strikes Between US and Iran Spike Diesel Prices

Global diesel and refined-product prices have surged following a series of military strikes between the United States and Iran, pushing Brent crude above $91 a barrel. The price spike follows a refined-products shortage that has been building since spring and was intensified by disruptions in the Persian Gulf and Russia.

Refinery outages in Russia are currently 60% above seasonal norms, contributing to a global decline in refined-product exports of 6 million barrels a day. This represents a 25% drop from the previous year, with Russia and the Persian Gulf accounting for three-quarters of the reduction. Diesel has been the primary driver of the rally, with wholesale product prices increasing by $40 per barrel since February.

Analysts at Goldman Sachs expect product margins to remain elevated through 2027. They attribute this trend to declining inventories and a security premium added to prices due to ongoing geopolitical uncertainty.