A driver pumps diesel fuel at a truck stop in Miami, Florida, on September 11, 2026. U.S. diesel fuel prices exceed $6 per gallon for the first time.
Joe Radle | Getty Images
Diesel prices may need to remain high through 2027 as refinery constraints grapple with government-backed consumption recovery and companies rebuild depleted inventories, according to Goldman Sachs.
“We need to keep product prices high enough so that some level of demand destruction continues into next year,” Nikhil Bhandari, Goldman’s co-head of Asia-Pacific natural resources research, told CNBC’s “Squawk Box Asia” on Monday.
The bank believes higher diesel prices are necessary to hinder demand recovery from overwhelmingly constrained refineries.
Goldman expects the global diesel and jet fuel crack spread (the premium that premium refined products offer over crude oil) will average more than $40 a barrel in 2027, more than double the usual level of about $20.
This is despite the bank expecting Brent crude to stabilize at around $80 a barrel as oil flows gradually normalize through the Strait of Hormuz in recent days.
“If demand recovers next year, we believe the global refining system will need to achieve its highest capacity utilization in 20 years,” Bhandari said.
Baden Moore, resources and energy research analyst at brokerage CLSA, said the recent downturn does not necessarily mean a permanent loss of demand.
“The underlying demand for petroleum products remains largely intact,” Moore said in an email to CNBC, adding that buyers are instead balancing the market through inventory management, reserve write-downs, consumption restraints and refinery optimization.
It could take up to two years to replenish global inventories while meeting demand, he added.
under pressure
Goldman said restoring demand for refined products could also conflict with strained refinery networks.
The bank expects 2026 to be another year of “negative refining capacity growth” as refining capacity outside China is expected to shrink by about 300,000 barrels per day.
Goldman estimated that product inventories could end in 2026 below the lowest days-of-supply levels recorded since 2015, according to the Global Refining Super Cycle Report released on September 21.
Meanwhile, around 2 million barrels a day of refining capacity in the Middle East remains offline, and diesel supplies are further limited by damage to Russian facilities, Bhandari said.
He added that U.S. refineries, which are operating at higher rates to compensate for lower production capacity, will also need deferred maintenance that temporarily reduces refinery operations.
The recovery in Gulf crude exports is not expected to significantly improve the availability of refined products, as shipments of diesel, gasoline, and jet fuel remain restricted.
Bhandari’s comments came after the G7 countries agreed on Friday to release 100 million barrels of crude oil and refined products over four months, including “a large number of diesel releases brought forward” in the first 20 days.
Following the announcement, European gasoline futures fell by 5.75%.
But experts are not optimistic that the additional supply will improve the availability of refined products and keep prices in check in the long run.
Saudi Aramco Chief Executive Amin Nasser said on Monday that emergency stockpiles “may get us through the winter” but cannot ensure long-term supplies.
“The emergency release only solves the liquidity problem, not the underlying inventory problem,” CLSA’s Moore said. Releases buy time, but it means inventory is consumed rather than rebuilt, making replenishment a long-term source of demand.
Bernard Au, Coface’s chief economist for Asia Pacific, agreed, adding in an emailed statement to CNBC that the impact of these emissions is “temporary rather than structural.”
