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Published : 11 Jul 2026, 09:01 AM
Russia's decision to ban diesel exports this week has roiled global energy markets, exacerbating shortages of the industrial fuel and sending prices soaring, even in countries that no longer buy the fuel from Moscow.
Diesel accounts for the largest share of global oil consumption, and soaring prices can ripple through the global economy given its wide range of uses, from industrial machinery and farm equipment to heavy transport and electricity generation.
Supply has remained tight for years due to strong post-pandemic demand and output reductions that accompanied refinery closures in the West. The Iran war has further strained the market.
Russia is the world's second-largest diesel exporter after the US, and refinery outages there can significantly affect global supplies of fuels. Its exports were already slowing prior to the ban due to domestic shortages left by Ukrainian drone attacks.
Diesel and gasoil loadings from Russia were just 234,000 barrels per day from Jul 1 to 10, according to Kpler, down from 400,000 bpd in June and the 2025 average around 817,000 bpd.
Adding to pressure on diesel supply was a fresh wave of US attacks on Iran just hours after Russia announced the export ban on Wednesday, reviving concerns around vessel movements through the Strait of Hormuz and the toll it has taken on West Asian exports.
US government data, also released on Wednesday, showed an inventory draw of more than 4.5 million barrels of diesel last week to 97.8 million as of Jul 3, or 6 percent below the five-year average.
"Headlines from the Persian Gulf combined with a Russian cessation of exports and a stunning (US Energy Information Administration) report to flush distillate sellers out of the market," Gulf Oil adviser Tom Kloza wrote to clients on Thursday.
Diesel Prices Surge in US and Europe
The US and Europe no longer import fuel from Russia, due to its invasion of Ukraine, but Moscow's export ban nevertheless sent prices for diesel surging in both regions, highlighting the globally interconnected nature of oil markets.
US ultra-low sulphur diesel futures HOc1 surged 11 percent on Wednesday to $154 a barrel, or an $80 per barrel premium to WTI crude.
European low-sulphur gasoil futures, meanwhile, hit an all-time high premium to Brent crude futures of $60.77 a barrel on Wednesday.
A loss of Russian exports leaves less supply available globally, forcing regular customers such as Brazil and Turkey to compete with European nations and other importers for US cargoes. This could create knock-on effects for power and agriculture sectors.
If Turkey kept its own production to itself for domestic use, that would cut off a source of diesel used to generate power in the Mediterranean during the summer peak in demand, Vortexa analyst Mick Strautmann said.
The rise in diesel prices also means that farmers' costs could rise ahead of the Southern Hemisphere's planting season and the Northern Hemisphere's harvest, with Brazilian and US Midwestern farmers competing for the same supplies.
"The US became the go-to diesel supplier for the EU/Great Britain when the Strait of Hormuz was disrupted, but every barrel it now redirects to Latin America is a barrel not going to Europe," said Qilin Tam, consultancy FGE NexantECA's head of refining. "And it's happening with US and ARA diesel inventories already well below the historical range for this time of year."
Renewed tensions in the West Asia also mean that China's relaxation of fuel export bans in July is not guaranteed to continue into August, curbing potential relief from Asia, Tam added.
