Diesel remains the sharpest pressure point in the energy shock from the Iran war, and Goldman’s view suggests relief depends on government stockpiles rather than extra Russian barrels. A European reserve release of the scale Goldman models would offer meaningful but temporary relief, narrowing refining margins and easing pressure on transport and industrial costs feeding into inflation. The bank’s broader view that product markets stay tight into 2027 means any relief rally in diesel could prove short-lived, keeping crack spreads elevated and refiners’ margins strong. For crude, a sustained diesel squeeze keeps demand for refinery runs high, supporting oil prices even if headline supply fears ease.
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Earlier:
- More on Russia’s diesel U-turn: 500,000 tons cleared for export after Trump-Putin deal
- IEA urges faster diesel releases as 400m-barrel March pledge lags, board meets Oct 15
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Goldman’s message on diesel is that Europe’s emergency stockpiles can take some heat out of prices, but Moscow’s offer won’t, and the underlying shortage is not going away soon.
Summary:
- Goldman Sachs said it does not expect Russia’s announced diesel releases to have a significant impact on global diesel prices
- The bank estimates a potential 50 million barrel release of diesel from Europe’s strategic reserves could lower US Gulf Coast and European wholesale diesel prices by $11 a barrel
- Russia recently said it could supply more diesel to global markets, with exports potentially reaching 3 to 3.5 million tonnes by year-end, amid talks with the US
- G7 members agreed on 2 October to release 100 million barrels of diesel and other reserves over four months, with a front-loaded diesel release
- In an earlier note, Goldman said diesel could stay expensive through 2027, with refining margins potentially averaging above $40 a barrel
Goldman Sachs said it does not expect Russia’s planned diesel releases to have a significant impact on global diesel prices, but estimated that drawing down Europe’s strategic diesel stocks could offer more meaningful relief.
The bank estimated that a potential release of 50 million barrels of diesel from Europe’s strategic reserves could lower wholesale diesel prices on the US Gulf Coast and in Europe by about $11 a barrel.
Russia has recently signalled it could supply more diesel to global markets. Russian officials said last week that talks with the US government were under way on supply and that Russian diesel exports could reach 3 million to 3.5 million tonnes by year-end. Goldman’s assessment suggests those volumes are too small to shift the balance in a market that remains severely stretched.
Diesel has been at the centre of the energy shock triggered by the war involving Iran. Disruption to Middle East supply, attacks on refining infrastructure and export restrictions in several countries have pushed prices to records. US diesel reached about $6.50 a gallon late last month, while European prices hit record highs.
Governments have already moved to respond. Group of Seven members agreed on 2 October to release 100 million barrels of diesel and other reserves through the International Energy Agency over four months, with a substantial diesel release front-loaded into the first 20 days. Goldman’s estimate indicates how much difference a European diesel release on the scale it models could make to prices.
The bank’s latest view builds on a series of notes on the refined products market. In late September, Goldman said a US ban on diesel exports, which it called plausible but not its base case, would lower US prices while raising them in Europe. In a note published earlier this month, the bank warned that diesel could remain expensive through 2027, as global refining capacity struggles to meet recovering demand while depleted inventories are rebuilt. It said margins on diesel and jet fuel could average above $40 a barrel next year, more than double their usual level, and that the G7 release would ease pressure only temporarily without fixing the structural shortfall.
Together, the notes point to a market where emergency stocks can buy time, but lasting relief depends on refinery capacity and a recovery in Middle East supply.
This article was written by Eamonn Sheridan at investinglive.com.