Diesel costs stay high as refining, not crude, sets the pace

Diesel prices remain disconnected from crude oil trends

Disrupted trade routes in the Middle East, inefficient tanker movements, and refineries damaged or offline due to the military conflict there are continuing to influence crude oil supplies, but the price of diesel keeps rising faster than the price of the oil from which it’s made.

Additionally, declines in Russian diesel production and exports and low global inventories are reasons to remain cautious about near-term relief.

Refiners are adapting to these conditions. They have strong incentives to optimize for the products the market values most, reinforcing why refining capability and yield can matter as much as crude-oil availability.

Some are increasing production of higher-value products such as diesel, while reducing lower-value fuel oil and using greater feedstock flexibility to respond to market volatility.

Diesel tightness is global, but the exposure differs

In the United States, diesel prices are complicated by refining capacity, inventories, and consumption not being evenly distributed.

The Gulf Coast produces a substantial volume of distillates like diesel while other regions rely more heavily on domestic transfers, pipelines, or imports. That means abundant supply in one part of the country does not necessarily translate into availability where diesel is needed.

Globally, International Energy Agency data shows diesel exports in September were lower than a year earlier as losses from the Middle East and Russia outpaced additional supply from other regions. Diesel inventories are being drawn down ahead of winter at a time when they would normally be building.

For Europe, record costs for crude oil and tanker transportation have squeezed refining margins, leaving Europe particularly dependent on imported diesel and jet fuel. Asian refiners are dealing with the same elevated freight economics, although China briefly provided some relief as it eased export restrictions during the summer.

Chinese diesel exports surged in August and September as strong international margins encouraged additional shipments, primarily into Asia-Pacific markets. But China again restricted broader fuel exports in October to protect domestic inventories, illustrating how quickly a potential source of incremental global diesel supply can appear and disappear.

Availability is not the same as accessibility

For supply chains, more crude or even headlines announcing more diesel supply do not automatically mean cheaper diesel. Crude has to reach a refinery, be converted into the products the market needs, and then move through pipelines, vessels, terminals, and distribution networks to reach demand.

Recent federal efforts to make red-dyed diesel available for highway use (featured in the October Edge video) illustrate the challenge: access at truck stops is limited, state rules vary, and the federal action provides temporary tax relief rather than creating a new nationwide pool of lower-cost highway fuel.

Likewise, newly authorized access to Russian diesel creates the potential for incremental supply. But announced volumes remain small, and delivery timing and unresolved commercial and legal considerations may limit the near-term impact.

Until refinery operations, inventories, and global product flows improve at meaningful scale, shipper budgets can remain exposed to elevated diesel costs even when crude markets appear healthier.

While 2026 is on pace to record the highest average annual diesel price in history, 2027 is predicted to be the third highest (after 2022) and sustained inventory rebuilding is unlikely before the second half of the year. Shippers and carriers should plan for fuel to remain an important part of transportation budgeting and network planning into next year.

Diesel prices

The average price of diesel in the United States entered Q4 2026 at a record high of $6.29 for September but came down slightly to $6.25 for October. That was substantially higher than the October 2025 price per gallon of $3.68.

U.S. average diesel price per gallon

The Mexico average diesel price per liter of fuel has been stable, hovering near 27 pesos since the beginning of summer.

Mexico average diesel price per liter

The average diesel price in Canada, shown here in Canadian cents per liter, has seen weekly fluctuations but has remained relatively even over the past two months.

Canada average diesel price per liter

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