Why Petrol and Diesel Stay Expensive Even When Crude Oil Prices Stabilize

The prospect of peace between Iran and the United States has caused oil prices to swing sharply over recent months. Brent crude, the global benchmark, has ranged from about $73 to $126 a barrel since late February and was around $95 on Friday.

European fuel costs have mirrored these movements, yet petrol and diesel remain notably pricey. Their rates also reflect refining costs and availability, not just the price of crude oil.

Despite a rise in electric‑vehicle registrations, petrol and diesel still power roughly nine out of ten passenger cars on EU roads. ACEA’s latest fleet data shows that 49.2 % run on petrol and 38.4 % on diesel, giving the two fuels a combined market share of 87.6 %.

Since the energy crisis began, several European governments have cut fuel taxes or introduced other support measures, though the level of aid varies across countries. Nonetheless, petrol and diesel prices stay near historic highs.

In the week starting 31 August, petrol averaged €1.95 per litre across the EU—about 4 % below its June 2022 peak of €2.03. Diesel was €2.04 on average, roughly 3 % under its record of €2.11 set in April 2026.

These figures are drawn from the European Commission’s Weekly Oil Bulletin, which includes duties and taxes. The bulletin’s historical series dates back to January 2005.

“The key reason for the widening gap between crude and European fuel prices is that this is increasingly a refining and product‑supply problem rather than simply a crude‑supply problem,” said Sumit Ritolia, lead analyst for refining supply and modelling at Kpler, speaking to Euronews Business. “Crude may be available, but the capacity to convert it into the right products—particularly diesel—has become much tighter,” he added.

Diesel price hikes affect even households without diesel‑powered vehicles. The fuel drives much of Europe’s road freight, agriculture and construction, so sustained cost increases can eventually push up food and other goods prices.

Recent eurozone inflation data shows inflation rose to 3.3 %, driven mainly by higher energy costs.

Why Europe is short of diesel

European fuel inventories are low, while conflicts in the Middle East and attacks on Russian refineries have disrupted global supplies of refined products.

After Russia’s full‑scale invasion of Ukraine, Europe shifted much of its diesel and jet‑fuel sourcing to the United States, India and the Middle East.

“For diesel and jet, Europe is the big importer, so it sets global prices,” said Alan Gelder, senior vice‑president for refining, chemicals and oil markets at Wood Mackenzie. “Prices are elevated here, but they’re elevated everywhere. It’s just more exacerbated in Europe because we’re the key import location.”

With Middle Eastern and Russian product exports constrained, traditional buyers of Russian diesel—such as Turkey and Brazil—are now competing with European buyers for supplies from the US, India and elsewhere. A disruption in one region can therefore tighten supplies worldwide as trade flows adjust.

Refining margins, which feed into pump prices, are at high levels. Reuters reports that Eurobob E5 petrol barges traded at a premium of $62.07 a barrel over Brent futures—only just below the June 2022 record of $62.10.

At the same time, European diesel futures hit a record premium of $78.91 a barrel over Brent futures on Tuesday, before easing to about $77 on Wednesday.

A refining margin measures how much more petrol or diesel is worth compared with the crude oil used to make it.

Consequently, a litre bought at a petrol station contains far more than the cost of crude oil. The illustration below uses recent market and EU benchmarks to show how crude, refining, distribution and taxes can combine in a representative litre of petrol. It is an illustration rather than a measured EU‑wide price breakdown.

In Europe, refineries are running at high capacity while inventories remain low. Data from Dutch consultancy Insights Global showed that independently held petrol stocks in the Amsterdam‑Rotterdam‑Antwerp hub fell to 752,000 tonnes in late August— their lowest level since September 2021—before rebounding the following week.

Refineries in Europe and the US are already operating near full utilisation. Ritolia said European refinery runs were around their highest levels in three to four years, while US refinery utilisation reached about 98 % in the final week of August. This leaves little spare refining capacity to respond to a potential supply shock.

Gelder also highlighted the upcoming autumn maintenance season and the risk that hurricanes could disrupt US Gulf‑Coast refineries. He noted that strong margins might tempt operators to postpone maintenance, but warned that doing so for too long could create reliability problems and increase the risk of unplanned shutdowns.

How long could fuel prices stay high?

Petrol prices could see some seasonal relief as summer driving demand fades and the market moves away from more expensive summer‑grade fuel, according to Ritolia.

“Diesel does not have the same seasonal release valve, especially as winter demand and tighter specifications approach, so diesel margins could stay elevated through autumn and into winter,” he said.

Diesel supplies are especially vulnerable because autumn refinery maintenance can cut production just as the market switches to winter‑grade fuel and heating demand begins to rise.

Analysts say higher Chinese diesel exports could provide some relief, though the key question is whether China can sustain those exports given its focus on domestic supply security. Ritolia added that India could supply more fuel to Europe because it has both refining capacity and products available for export.

Even if crude prices fall, that would not necessarily lead to an immediate, substantial drop at the pump. The main bottlenecks today are limited spare refining capacity, shortages of finished products and low inventories.

Both experts said a lasting reopening of the Strait of Hormuz and a recovery in Middle Eastern fuel exports would be important for bringing prices down.

“A continuation of the conflicts just keeps prices ticking up because global demand is still outpacing global supply,” Gelder noted. “If things are prolonged, the only way the world comes into balance is if demand is suppressed through even higher prices.”

He said markets could react quickly to a credible political agreement and the restoration of shipping through the Strait.

“If the Strait opens, the crude price would probably drop quite sharply,” Gelder said. “The diesel premium would come down a bit more slowly, but you would see a price drop.”

For European consumers to see meaningful relief, analysts agree that several things would need to happen: a recovery in Middle Eastern and Russian product exports, continued strong refinery availability, higher exports from alternative suppliers such as India and China, and eventually a rebuilding of inventories.

“Without that, competition for available diesel cargoes is likely to remain strong,” Ritolia concluded.

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