A driver fills up a diesel truck at a Miami, Florida station on September 11, 2026, as U.S. diesel prices surpass $6 per gallon for the first time.
Joe Raedle | Getty Images
Goldman Sachs warns that diesel prices may need to stay elevated through 2027, as limited refinery capacity struggles to keep pace with rebounding consumption from governments and firms replenishing depleted stocks.
“We must keep prices high enough to sustain some demand destruction into next year,” said Nikhil Bhandari, Goldman’s co‑head of Asia‑Pacific natural resources research, during a CNBC “Squawk Box Asia” interview on Monday.
The bank argues that elevated diesel prices are required to stop recovering demand from overwhelming already‑strained refineries.
Goldman projects that global diesel and jet‑fuel crack spreads — the premium refined products earn over crude — will average above $40 per barrel in 2027, more than double the typical $20 level.
This outlook holds even though Goldman anticipates Brent crude stabilizing near $80 per barrel as crude shipments through the Strait of Hormuz begin to normalize.
“If demand rebounds next year, the global refining system may need to operate at its highest utilization level in two decades,” Bhandari added.
Baden Moore, an energy‑resources analyst at CLSA, noted that the current weakness does not automatically signal a permanent loss of demand.
“Underlying oil‑product demand remains largely intact,” Moore wrote in an email to CNBC, explaining that buyers have offset the shortfall by managing inventories, drawing down reserves, curbing consumption and optimizing refinery operations.
He added that rebuilding global inventories while satisfying demand could require as long as two years.
Under pressure
Goldman cautioned that a rebound in refined‑product demand could clash with an already‑strained refinery network.
The bank forecasts another year of negative refining‑capacity growth in 2026, with capacity outside China projected to fall by about 300,000 barrels per day.
According to Goldman’s Refining Super Cycle report released September 21, product inventories could finish 2026 below the lowest days‑of‑supply level seen since 2015.
Meanwhile, Bhandari noted that about two million barrels per day of Middle Eastern refining capacity remain offline, and damaged Russian facilities have further tightened diesel supply.
He added that U.S. refineries, which have been operating at elevated rates to offset lost capacity, will also need deferred maintenance that will temporarily cut refinery throughput.
The anticipated recovery of Gulf crude exports is unlikely to meaningfully boost refined‑product availability, since diesel, gasoline and jet‑fuel shipments continue to face restrictions.
Bhandari’s remarks follow a Friday agreement by the Group of Seven to release 100 million barrels of crude and refined products over four months, featuring a front‑loaded substantial diesel release in the first 20 days.
The announcement pushed European gasoil futures down by 5.75 %.
However, experts remain skeptical that the extra supply will meaningfully improve refined‑product availability or curb prices over the long term.
“Emergency reserves might buy us a winter, but they cannot resolve long‑term supply challenges,” said Saudi Aramco CEO Amin Nasser on Monday.
“Emergency releases address only a liquidity shortfall, not the underlying stock issue,” Moore from CLSA observed. While they buy time, they consume inventories rather than rebuild them, turning restocking into a prolonged source of demand.
Bernard Aw, chief economist for Asia‑Pacific at Coface, concurred, noting in an emailed statement to CNBC that the effect of such releases is temporary rather than structural.
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