The International Energy Agency announced that a global diesel shortage triggered by war-damaged refineries in the Middle East and Russia will extend into the new year, despite attempts to mitigate the crisis through sanctions relief and emergency stockpile releases. The fuel crisis has already generated significant economic consequences, raising costs for goods and impacting real incomes, economic activity, and inflation globally.
However, Western refineries with operations in Europe and North America are positioned to capitalize on the supply constraints. TotalEnergies, Shell, BP, and major US refiners including Marathon Petroleum, Valero Energy, and Phillips 66 have reported or are expected to report record profits. The market values of three largest US oil refiners have more than doubled since the crisis began, with combined stock gains of $215bn this year. TotalEnergies’ refining and chemicals business income more than quadrupled to $1.8bn in the second quarter, while Shell’s refining margins are forecast to nearly double in the third quarter.
Diesel supply has contracted by approximately 1 million barrels daily from 2025 levels due to refinery damage and export restrictions, while US fuel exports have climbed by over 50% to record highs. Refiners have benefited from the price differential between crude oil and refined products, as crude prices have remained relatively moderate while diesel costs remain elevated. Companies with flexible production capacity have fared particularly well, with some shifting output toward high-demand fuels like jet fuel and diesel to capture premium pricing and address regional shortages.
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