Essay by Eric Worrall
“… EU climate regulations forced energy companies to shut down refining capacity in anticipation of demand destruction that has yet to materialize. …”
Goldman Sachs Sees Diesel Refining Margins Soaring to $63 a Barrel
By Irina Slav – Aug 31, 2026, 1:45 AM CDT
Refiners are set to reap stronger profits on the global diesel shortage, Goldman Sachs has said, revising its earlier profit forecast to double the total profits that refining companies would make from the squeeze.
“Rising strikes on refineries in the Middle East and Russia have further constrained already-stretched global refining capacity, pushing refined-products margins to new highs,” the bank’s analysts wrote in a note, as quoted by Bloomberg. “Diesel remains at the epicenter of the rally,” they added
Global diesel stocks are running low due to refinery damage in the Middle East and Russia. According to Goldman’s commodity team, refinery outages are currently 60% higher than the seasonal average, and the tightness in diesel will extend into next year.
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In Europe, the situation is additionally complicated by a shortage of refineries, as EU climate regulations forced energy companies to shut down refining capacity in anticipation of demand destruction that has yet to materialize.
Read more: https://oilprice.com/Latest-Energy-News/World-News/Goldman-Sachs-Sees-Diesel-Refining-Margins-Soaring-to-63-a-Barrel.html
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The Iran war and Ukraine conflict might have interrupted Western access to Middle Eastern and Russian refining capacity, but our lack of resilience to handle such an interruption, the lack of Western refinery capacity, is a self inflicted failure.
Fuel shortages couldn’t have come at a worse time. Diesel prices are strongly tied to food prices, or in the worst cases, food availability.
A friend who runs a farm in NSW has told me that lots of people he knows cut back on planting because with elevated diesel and fertiliser prices, they couldn’t see a path to making a profit. How many other farmers throughout the world are making similar choices?
President Trump’s efforts to revive the USA’s fossil fuel industry may help to buffer the USA from the worst of the coming diesel supply shock, except in places like California which are still doing everything in their power to wreck their own economies with European style climate regulations. But Europe, whose economies are already stretched to the brink by the Ukraine war, skyrocketing government debt and crippling regulations on farming and industry, they could be in for some real hardship.
Naturally all this will be blamed on the coming “super El-Nino” – you can already see the green establishment laying the groundwork for a climate narrative interpretation of any Fall food shortages. But make no mistake, much of the increase in food prices which a spike in diesel prices could trigger will be because the irresponsible climate idiocy our politicians destroyed the economic viability of refining oil in Western countries.
