Goldman Sachs Raises Diesel Profit Forecast by Over 100% as Geopolitical Conflicts Tighten Global Refining Markets

Global refined fuel supplies are facing severe strain due to instability in the Middle East and the Russia-Ukraine war. Goldman Sachs has released a report significantly raising its diesel production profit forecast for next year by over 100%.

Goldman Sachs analysts Yulia Zhestkova Grigsby and Daan Struyven stated in the report: "The increasing number of attacks on refineries in the Middle East and Russia is further constraining already tight global refining capacity, pushing refined product margins to record highs, with diesel at the center of this surge."

Goldman notes that global refinery outage rates are currently 60% higher than seasonal norms. Despite some demand softening, refined product inventories continue to decline. The firm forecasts that next year, the average crack spread for diesel in the U.S. versus Brent crude will reach $63 per barrel, and $49 in the EU—far exceeding previous forecasts of $27 and $19, respectively.

Additionally, Russia has extended its diesel export ban until September, while Brazil—the world’s second-largest importer—is seeing demand rebound. With the approach of winter in the Northern Hemisphere driving heating fuel demand, the global fuel crisis could worsen further.

Geopolitical risks are having a greater impact on refined products than on crude oil. Goldman analysts point out that while crude oil exports from the Persian Gulf have recovered to 70–80% of pre-war levels, refined product shipments have only reached 40%. They emphasize, "Full recovery of refining capacity depends on the easing of global geopolitical tensions."

Shell CEO Wael Sawan warned that refined fuel markets are facing a "triple threat"—attacks on Russian refineries and hazardous shipping conditions in the Persian Gulf and Red Sea. TotalEnergies CEO Patrick Pouyanne confirmed the situation, noting that while some crude oil still passes through the Strait of Hormuz, refined products are essentially unable to be shipped out.

Amid this supply-demand imbalance, Brent crude futures have risen nearly 50% this year to around $91 per barrel, while European diesel futures have more than doubled.