Global diesel supplies are expected to stay extremely tight until the end of winter, according to Vitol CEO Russell Hardy, who cited constrained refining capacity, Russia’s export ban, and peak seasonal demand as the main drivers.

Hardy said the market is losing about 4 million barrels of oil products a day, with nearly 2 million barrels short from Russia and about 2 million barrels from the Middle East. He linked the deficit to a combination of geopolitical disruption and a system already operating with limited spare refining capacity.

Military actions in Ukraine and around Iran have hurt refinery operations in Russia and the Middle East, tightening supplies in key export regions. Russia’s export ban has added further pressure to global product flows, while winter demand has raised consumption at a time when inventories are already under strain.

According to the report, the impact has pushed diesel refining margins in the U.S. and Europe to record levels and reduced supplies available to Asia. In the U.S., refineries are described as operating near the edge of their capabilities, with the refining margin reaching $108.02 per barrel.

Hardy said crude oil markets appear more stable than refined products, but that has not been enough to stop stock declines because refinery throughput remains the main bottleneck. The report also said high prices and supply shortages are expected to reduce global oil demand in 2026 by 1.5 million barrels per day compared with 2025.

Why It Matters

Diesel is a critical fuel for freight, industry, shipping, and parts of power generation, so a prolonged shortage can extend beyond energy markets into inflation, logistics costs, and industrial activity. That gives the story broader macro relevance even without a new headline move in crude.

The report also underscores a structural market issue: crude availability alone does not resolve product shortages when refining capacity is stretched. That distinction matters for investors tracking inflation risks, central bank sensitivity to energy-driven price pressure, and broader cross-asset sentiment.