Systematic destruction of Russian refinery capacity

Since March 2026, Ukraine has carried out targeted drone strikes against Russian refining infrastructure. According to data from Energy Aspects, cited by Bloomberg, Russian refinery facilities processed an average of 3.91 million barrels of crude oil per day in the first ten days of July — the lowest level recorded since March 2005. Compared to the same period in 2025, this represents a decline of more than 1.4 million barrels per day.

Analysis firms estimate that between 30 and 60 percent of Russia's domestic refining capacity has been put out of action as a result of the strikes, according to research sources reviewed by 24markets. At least 24 of Russia's 34 refinery facilities are reported to have been hit.

Russian crude oil processing is now at its lowest level in 21 years — and diesel markets worldwide are feeling the impact

The export ban sends prices soaring

To address acute domestic fuel shortages, Moscow introduced an export ban on diesel, gasoline, and jet fuel in July 2026. The consequences were felt almost immediately in global markets.

Data from Kpler shows that Russian diesel and gasoil loadings fell to an average of just 234,000 barrels per day between July 1 and 10 — down from 400,000 barrels per day in June and dramatically lower than the 2025 average of around 817,000 barrels per day. Export volumes had already fallen by 71 percent compared to last year's average before the ban formally took effect.

The International Energy Agency (IEA) reported that Russia's total exports of refined products in June 2026 were the lowest ever recorded — down 660,000 barrels per day from June 2025.

234,000 bbl/day
Russian diesel exports July 1–10
817,000 bbl/day
Russian diesel exports 2025 average
+11%
Single-day price jump US diesel July 8
$154/bbl
US ULSD futures price

Market reactions: Historic premium peaks

On Wednesday, July 8, 2026, US futures contracts for ultra-low sulfur diesel surged 11 percent to $154 per barrel — the largest single-day jump in four years. This created a premium differential of $80 per barrel over WTI crude.

In Europe, gasoil futures reached a record premium of $60.77 per barrel over Brent. The physical ARA diesel crack — a key indicator for European prices — reached $70.3 per barrel on July 13, the highest level since March of this year, according to source material from OilPrice.com and research data available to 24markets.

US diesel inventory for the week ending July 3 showed a drawdown of more than 4.5 million barrels, keeping storage volumes at around 97–104 million barrels — approximately 6–7 percent below the five-year average.

Analysts warn of further tightness

Industry experts are unambiguous about the severity of the situation. Tom Kloza, chief energy analyst at Gulf Oil, describes diesel as the product everyone now needs to watch closely, stressing that the market was already under pressure before the Russian ban. Eleanor Budds, director of fuel and refining research at S&P Global Energy CERA, identifies Europe, Latin America, and Africa as the regions that will feel the consequences most acutely. James Bambino, senior analyst at CERA, warns specifically that Europe will need to source alternative barrels by autumn, which could tighten the Eastern Mediterranean and send ripple effects into the ARA market.

The IEA has revised down its forecasts for Russian oil production in 2026 and 2027 to 8.9 and 8.8 million barrels per day respectively — down from 9.2 million barrels per day in 2025. That equates to a downward revision of 85,000 barrels per day for 2026 and 150,000 barrels per day for 2027.

Who profits from the crisis?

While diesel users worldwide pay more, margins are rising for refinery companies in politically stable regions. Major integrated oil companies such as Valero, Phillips 66, Marathon Petroleum, ExxonMobil, and European players including Shell and TotalEnergies are benefiting from the widened crack spreads — the difference between crude oil prices and refined product prices.

Refinery capacity in the US, Singapore, and the UAE is highlighted by industry sources as particularly well positioned to capture a "secure supply premium" in a market where geopolitical risk is now being systematically priced in.

For Norwegian players, the oil price picture is mixed: higher diesel prices support refining margins, but the effect on Brent crude has so far been more muted, as the reduced Russian refining activity primarily affects product markets rather than the crude oil price directly.