The oil market has spent months watching the Strait of Hormuz, but the more durable pressure on fuel prices is building further down the supply chain. Diesel supply faces three fresh risks heading into the winter heating season, each tied to how much global refining capacity is sitting offline rather than to crude oil itself. A meaningful share of global refineries remains down, much of it from unplanned outages that carry no repair timeline, and that keeps diesel, gasoline and jet fuel tighter than the crude market alone would suggest. That gap between a recovering crude picture and a still strained product market is what makes the months ahead worth watching closely.
Bruno Santos is a Market Intelligence Analyst at StoneX in Brazil, where he covers energy markets and delivers price research and market intelligence. His work spans production, supply and demand tracking, trade flows and price formation across the energy complex.
Key Themes from the Discussion
A large share of global refining capacity is offline, much of it from unplanned outages with no return date.
Ukrainian attacks on Russian refineries have driven the largest volume of unplanned outages, tightening diesel and distillate supply.
U.S. refiners are running strong margins, lifting diesel and jet fuel output for domestic use and export.
Refining Outages Keep Diesel and Jet Fuel Supply Tight
Offline refining capacity reached around 14% of the global total between April and May, and roughly 10% remains offline, above the five-year average for this time of year. The bigger problem is the mix, and as Santos explains, unplanned outages behave nothing like scheduled work because "it can come from an attack, a fire or a power outage. There is no clear calendar and no clear repair timeline". Unplanned losses made up half of the offline total in June, which means a large slice of lost supply has no scheduled return. Consequently, diesel, gasoline and jet fuel can stay tight even as crude oil flows recover, leaving the downstream chain to normalize more slowly than the upstream.
Refinery Attacks Threaten to Deepen the Diesel Squeeze
Russia holds the largest volume of unplanned offline refining capacity, at around 2.5 million barrels per day, after Ukrainian attacks on refining centers disrupted crude processing. Total unplanned outages stood at around 3.6 million barrels per day by the end of July, with further losses at the Paraguana Refinery Complex in Venezuela and attacks reducing part of the processing capacity in Saudi Arabia and Kuwait. The first of the three forward risks is that new strikes on refineries in Eastern Europe and the Middle East could deepen the current shortfall, and that danger sits on top of a market that has not yet healed. Refinery damage is also slower to undo than a blocked trade route, which changes how quickly relief can arrive. According to Santos, "a damaged refinery, however, needs repairs before it can return, and it also depends on the timely arrival of crude barrels to keep operating".
Make Energy Insights Your Competitive Advantage
Access live prices, supply and demand data, and actionable market commentary focused on the Energy sector. Sign up for StoneX Market Intelligence today and see how our Energy insights can elevate your strategy.
--- Written by Gus Farrow, Senior Manager, StoneX Media
--- Expert: Bruno Santos, StoneX Brazil, Market Intelligence Analyst
Energy
StoneX TV content is created, produced, and distributed solely by StoneX Media Ltd (“StoneX TV”) and is provided for informational and educational purposes only. StoneX TV does not provide investment, financial, legal, or tax advice and does not make any recommendation or endorsement of any investment strategy, transaction, or financial instrument. Nothing in this content constitutes, or should be construed as, investment advice or a recommendation to buy, sell, or hold any financial instrument, including securities, futures, derivatives, digital assets, foreign exchange products, or CFDs. This content does not constitute an offer, invitation, or solicitation to engage in any investment activity. The information presented is general in nature and is not tailored to the financial situation, investment objectives, or risk tolerance of any specific person. You should not rely on this content as a substitute for independent professional advice. Investing and trading in financial instruments involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Any views or opinions expressed are those of the presenter at the time of publication and are subject to change without notice. Such views may not necessarily reflect those of StoneX Media Ltd or its affiliates. StoneX Media Ltd and its affiliates, including StoneX Group Inc., may from time to time have positions in, or engage in transactions involving, the financial instruments referenced. This content may include general market commentary and opinion. It does not constitute independent investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. StoneX Media Ltd is not authorised or regulated to provide investment services and does not act in a fiduciary capacity. StoneX Media Ltd is incorporated in Ireland and operates in accordance with applicable Irish law. It is a wholly owned subsidiary of StoneX Group Inc. and is a separate legal entity from other subsidiaries within the StoneX Group, which may be regulated in various jurisdictions. StoneX Media Ltd does not act on behalf of, or provide services for, any regulated affiliate. This content is not directed at, and may not be distributed to, any person in any jurisdiction where such distribution would be contrary to local laws or regulations. Supporting documentation for any claims, comparisons, statistics, or technical data may be made available upon reasonable request, where applicable.
Discover more insights
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
