Middle distillate cracks have surged to record levels this week as geopolitical tensions and supply disruptions continue to tighten global diesel markets, according to analysis from ING's commodities strategists Warren Patterson and Ewa Manthey. The renewed escalation of strikes in and around the Strait of Hormuz has effectively eliminated hopes for a swift recovery in oil product flows from the Middle East, leaving diesel markets acutely constrained. The tightness is most pronounced in the diesel sector, where the ICE gasoil crack—the pricing spread between crude oil and refined diesel—reached a record high of 79 dollars per barrel on Tuesday.
In the United States, diesel cracks are trading well above 100 dollars per barrel, hovering near all-time highs achieved in the previous month. Backwardation in the market structure provides additional evidence of supply concerns. The ICE gasoil September/November spread is trading at a backwardation of 80 dollars per tonne, meaning prompt contracts command higher prices than those further out in time, which signals immediate supply anxieties.
ING's commodities strategists noted that "given disruptions to Middle East and Russian diesel exports, and with little sign of an imminent recovery, middle distillate cracks are likely to remain highly elevated and volatile, particularly as we move towards seasonally stronger demand." They added that "the global refining system has little slack to make up for the disruptions we are currently seeing." Since mid-June, diesel prices globally have outpaced gains in crude oil prices due to multiple converging factors. The wars in Iran and Ukraine have constrained product supply from the Middle East and Russia, while Chinese fuel exports have not meaningfully rebounded following months of restrictions designed to protect domestic supply. Additionally, Strait of Hormuz flows remain below pre-war levels.
Refiners are positioned to benefit significantly from the global diesel shortage. Goldman Sachs revised its profit forecast last week, projecting that refining companies' profits from the squeeze would roughly double from earlier estimates. Source: Oilprice.com, published September 2, 2026 by Tsvetana Paraskova
Source: oilprice.com