Diesel margins triple as 5 million barrels of refining capacity stays offline
Diesel is the story for anyone running trucks or a tank wagon this week. Margins on the fuel have tripled this year while about 5 million barrels a day of refining capacity is offline. Haulers are paying for both. Prices have roughly doubled. Truckers in Los Angeles are paying around $8 a gallon, and one Ohio analyst said $10 is possible if supply stays this tight.
Who is banking it
The refiners. Valero is up 161% this year and PBF Energy 211%, both carried by those diesel margins. Shell's refineries are forecast to earn double the profit from every barrel, and Equinor told the market its trading and refining arm will beat its $400 million guidance for the third quarter. The figures behind the refiner stock moves project fuel stocks staying below five-year averages through 2027 even if the Middle East fighting stops.
For a jobber the position is uncomfortable. The companies making the fuel are doing well, and the pressure is downstream on the people who haul it and sell it, where a doubled wholesale cost either eats the margin or goes onto the pump sign.
Heating oil
New England families are looking at a steep winter. Senator Elizabeth Warren put the season's heating oil bill at a rise from $1,749 to $2,297, more than $500, and blamed the Iran war. Cause aside, the same tight distillate barrels that lift home heating oil lift road diesel, so the number matters to anyone delivering either.
The reserve talk
The IEA governing board met informally today at 13:00 local time to weigh releasing oil and diesel reserves, according to EU diplomats. A coordinated release of diesel specifically would be unusual and aimed straight at the distillate shortage. Whether it reaches the US rack is a separate question. The bind here is refining capacity, not crude sitting in the ground, and reserve barrels of crude still need somewhere to be processed.
Cardon down
Venezuela's 300,000 barrel-a-day Cardon refinery is offline after a gas line rupture and blast suspended operations. The plant mostly serves Venezuela's own market, so it is not a direct US supply line. It still matters: every barrel of refining lost anywhere pulls from an already thin global pool, and that feeds back into US prices through crude and product trade flows.
What to watch
Watch the IEA for whether today's informal talk turns into an actual release and how large. A real diesel draw could take some edge off the rack; talk alone will not.
Watch how long Cardon stays down. Days is noise. Weeks adds to the capacity already missing.
And watch crude. Brent is above $101, up from about $60 before the war, held there by storm threats and Houthi attacks on shipping even as tanker trackers say flows out of Hormuz have recovered. Prices could ease if the strait stays open and OPEC+ keeps adding output. They could stay firm if the supply scares keep coming. For operators, the near-term math is the same either way: distillate is tight, margins are thin for anyone buying wholesale, and the relief, if it comes, depends on refining coming back more than on crude.