The Wall Street Journal reports that oil refineries have become the most vulnerable link in the global diesel market. The crises involving Iran and Ukraine have exposed how heavily the world relies on supplies from the Middle East and Russia.
According to the newspaper, diesel prices have surged sharply. In the US, they rose above $6 a gallon for the first time this month and continued climbing to $6.45. The jump has alarmed governments and markets because diesel remains a critical fuel for industry, transport and agriculture.
WSJ says fuel shortages are already being felt in rural Brazil, at filling stations in Libya and in several African countries that can no longer afford imports at current prices. At the same time, disruptions in the Strait of Hormuz and the conflict in Ukraine have altered global trade flows.
The publication says Kuwait, the UAE and Iraq have already had to cut diesel exports sharply. In recent weeks, Houthi attacks have also curbed Saudi Arabia’s exports from refineries on the Red Sea coast, hitting the country’s main route that bypasses the Strait of Hormuz.
Data from the International Energy Agency show that the volume of diesel effectively trapped in the Persian Gulf is about three times larger than the volume of Russian supplies missing from the market compared with the period before the war in Iran began.
WSJ also notes that the US and Israeli attack on Iran in February came after a decade of large-scale refinery construction in the Middle East. According to the paper, projects led by the region’s national oil companies more than doubled Middle Eastern diesel exports in 2017-2025, giving the region a 19% share of global exports over that period.
Russia had also been increasing diesel production, not by building new refineries but by upgrading existing plants. Exports rose by one-third in 2017-2023, until Ukraine began taking Russian refining capacity offline with drone strikes.
The report points to another consequence as well: heavy investment in refineries increased pressure on refining margins in the US and Europe. Western oil companies have built almost no new refineries for nearly 30 years, while more than a dozen such facilities have been shut in the US and Europe since 2015.
Western refineries have been operating at near-full capacity and shifting output toward diesel at the expense of other petroleum products, including gasoline and jet fuel. Even so, WSJ says that has done little to fill the gap left by the Middle East and Russia.
Because of the conflicts in Iran and Ukraine, the US has remained the only major producer of diesel and other refined products. Even so, support is building for a ban on fuel exports as a way to bring prices down ahead of midterm elections.
The newspaper warns that such a US ban would likely trigger another sharp rise in prices worldwide and could push other major diesel exporters, including China and India, to follow suit. Russia has already sharply restricted exports because of damage to its refineries.
“We are witnessing the emergence of a diesel market that is tighter than ever before,” the IEA said.
