Global diesel supply tightens as refinery outages hit winter risk zone

Roughly 10% of global refining capacity remains offline heading into August, above the five-year average for this time of year, with unplanned outages accounting for half of the total and carrying no clear repair timeline. The shortfall is keeping diesel, jet fuel, and gasoline markets tighter than crude oil supplies alone would suggest, raising concerns ahead of the Northern Hemisphere's winter heating season.

Ukrainian Strikes Drive Record Outages

Russia holds the largest share of unplanned refinery losses at approximately 2.5 million barrels per day, the result of a sustained Ukrainian drone campaign targeting processing centers across the country. Large Russian refineries and oil tankers, along with pipeline infrastructure, were hit at least 30 times in July alone — the second-highest monthly total since Russia's full-scale invasion, according to Bloomberg. On the night of August 6, Ukrainian forces struck the Yaroslavl Oil Refinery, while earlier in the week, a major refinery in the Saratov region was also hit.abcnews+3

Total unplanned outages globally stood at around 3.6 million barrels per day by the end of July, according to StoneX analyst Bruno Santos, with additional losses at Venezuela's Paraguana Refinery Complex and attacks reducing capacity in Saudi Arabia and Kuwait. "A damaged refinery needs repairs before it can return, and it also depends on the timely arrival of crude barrels to keep operating," Santos said.stonex

Russia's Awkward Oil Problem

Despite the refinery damage, Russia managed to increase crude production above 9 million barrels per day in July, up roughly 100,000 bpd from June, as damaged refineries freed barrels for export, Reuters reported. Moscow plans to increase crude exports from western ports by 4% in August, though tight tanker availability in the Black Sea could limit that effort.oilprice

The refinery losses have also forced Russia into the unusual position of importing refined fuels. Traders shipped nearly 30,000 metric tons of diesel and jet fuel from South Korea's Ulsan port to Russia's Far East in late July, according to Kpler and Vortexa shiptracking data cited by Reuters. Moscow has extended its domestic diesel export ban through the end of August and its gasoline export ban through January 2027.globalbankingandfinance+1

Winter Heating Season Looms

The concern now is timing. Goldman Sachs ↗ 0.53% forecast earlier this year that diesel margins would remain elevated through 2026, projecting European diesel margins at $37 per barrel in the fourth quarter and U.S. margins at $50 per barrel. U.S. refiners are running strong margins and lifting diesel and jet fuel output for both domestic use and export.oilprice+1

Santos identified three forward risks: new strikes on refineries in Eastern Europe and the Middle East, the slow pace of repair for damaged facilities, and the approach of winter demand. "Unplanned outages behave nothing like scheduled work," he said, "because it can come from an attack, a fire or a power outage. There is no clear calendar and no clear repair timeline".stonex