Diesel prices could remain elevated through 2027 as constrained refinery capacity struggles to keep pace with recovering demand and efforts to rebuild depleted fuel inventories, according to Goldman Sachs.
Nikhil Bhandari, Goldman’s co-head of Asia-Pacific natural resources research, said refined-product prices may need to stay high enough to suppress demand next year. The bank expects global diesel and jet-fuel crack spreads to average above $40 per barrel in 2027, more than double their typical level of around $20.
Goldman expects Brent crude prices to stabilize at about $80 per barrel as crude flows through the Strait of Hormuz gradually return toward normal levels. However, Bhandari said a rebound in demand could force the global refining system to operate at its highest utilization rate in two decades.
The pressure is being compounded by depleted inventories and reduced refining capacity.
Refinery Constraints Keep Fuel Markets Tight
Goldman expects global refining capacity outside China to shrink by about 300,000 barrels per day in 2026, marking another year of negative refining-capacity growth. The bank also estimates that product inventories could end the year at their lowest days-of-supply level since 2015.
About 2 million barrels per day of Middle Eastern refining capacity remains offline, while damage to Russian facilities has further restricted diesel supplies. U.S. refineries have increased operating rates to offset some of the lost capacity, but deferred maintenance could temporarily reduce production.
The rebuilding of inventories could take as long as two years. Baden Moore, resources and energy research analyst at CLSA, said underlying demand for oil products remains largely intact, with buyers instead relying on inventory management, reserve drawdowns, reduced consumption and refinery optimization to balance the market.
The Group of Seven’s decision to release 100 million barrels of crude and refined products over four months provided some short-term relief. European gasoil futures fell 5.75% following the announcement, which includes a substantial diesel release during the first 20 days.
However, industry experts do not expect the emergency supplies to solve the underlying shortage. Saudi Aramco CEO Amin Nasser said emergency reserves could help through the winter but would not resolve longer-term supply problems.
Why It Matters: Persistently high diesel prices could affect transportation, manufacturing and other industries that rely heavily on refined fuels. With inventories needing to be rebuilt while refinery capacity remains constrained, the pressure on fuel markets could extend well beyond the current supply disruption.
