The war in the Gulf together with the refinery war in Russia and empty fuel storage tanks are keeping diesel at historic highs. Inventories are tightening as we approach the first quarter of 2027.
Diesel is not just car fuel. It powers trucks, ships, tractors, generators and factories. When it becomes more expensive, the effect does not stop only at the pump: it passes into transport costs, food, industry and ultimately fuels inflation.
The issue is not only how much the driver pays, but how much it costs to produce and move every product in the real economy.
The picture at a glance
| Indicator | Indicative price |
|---|
| Brent (close 1/10) | $102.31 per barrel (from $105.28 on 28/9) |
| US, retail diesel (28/9) | $6.38 per gallon (record $6.53 on 21/9, highest since 1994) |
| EU, retail diesel (28/9) | €2.24 per liter (weighted average, new record) |
| Greece, retail diesel (30/9) | €2.21 per liter, about €2.16 after the 1/10 subsidy |
| Wholesale diesel, Northwest Europe (18/9) | $1,536 per ton, from $752 before the war (+104%) |
| US diesel crack spread (14/9) | $118.62 per barrel, record |
| EIA forecast for US diesel | $5.55 per gallon in Q4 2026, $4.40 in 2027 |
| Russia, diesel export ban | Officially extended until 31/10 (decree 30/9) |
| Greece, pump subsidy (1–15/10) | 15 cents per liter, about 20 with refinery discounts |
Prices in the EU vary greatly from country to country. On 21 September the Netherlands was at €2.58, Greece at €2.22 and Malta at €1.21. The differences are mainly due to taxation, but also to marketing margins and distribution costs. On the EU average, diesel is now more expensive than gasoline by about 13 cents.
Three shocks in a tight market
The rise in crude does not explain, at least not on its own, the diesel surge. The refining margin is also critical, the difference between the value of a refinery’s products and the cost of the crude it processes. Today it is at record levels, because three pressures acted simultaneously.
1. Hormuz and the Middle East. The US-Israel war with Iran began on 28 February and smooth passage through the Strait has been disrupted since then. Before the war, about one fifth of global oil passed through there.
In September, crude exports from the Gulf recovered significantly: Kpler estimates them at 12.5 million barrels per day in the week to 27/9, about 1 million below pre-war levels, and the Saudi East-West pipeline is operating again at about 3.5 million barrels per day.
The recovery, however, is fragile: at least three tankers were attacked this week in their attempt to pass through the Strait, and fuel shipments, that is products and not crude, remain limited, while Iran and its Houthi allies have also struck refineries in the region. The KSE Institute study estimates Gulf export losses at 152 million barrels from March to August. The region’s diesel exports to Europe were at a six-year low in September. The market is also pricing in the possibility that the disruption will be prolonged.
2. Russian refining. Ukrainian attacks have drastically reduced or stopped production at three of Russia’s six largest diesel refineries, while Kyiv claims it has put more than 45% of Russian refining capacity out of operation.
Russia, the world’s second-largest diesel exporter after the US, has banned exports by producers. The ban was due to expire on 30/9 and the government officially extended it by decree until 31 October, citing the need to secure the domestic market during the harvest.
A broader fuel export ban is in force until 31 January 2027. In 2025 Russia exported 34.2 million tons of diesel, versus 62.5 million for the US, and its exports fell below 1 million tons in June, from about 2.5 million a year earlier. The Russian shock, however, should not be overstated: the loss of Russian exports (68 million barrels) is less than half the Gulf loss.
3. Low inventories. This is the most critical element, because it turns every disruption into a price jump. In the US, distillate inventories were 105.2 million barrels on 25 September, about 13-14% below the five-year average and down 2.3 million barrels in one week, while on the East Coast they were about 31% lower.
The US Energy Information Administration (EIA) sees them below 100 million barrels and below the five-year low through most of 2027. US refineries are operating at 98% of capacity. In the European Amsterdam-Rotterdam-Antwerp hub, inventories were 16% below the five-year average in July. In North America, companies are not renewing tank leases, because there is no fuel to store.
The result is a vicious circle: traders chase prompt cargoes, refineries shift production toward diesel and margins remain high.
US: Record prices and pressure to curb exports
The average diesel price rose from $3.46 per gallon in mid-January to a record $6.53 on 21 September, that is about 89%. It surpassed the previous weekly record of June 2022 ($5.81). On 28 September the price fell for the first time after 11 consecutive weeks of increases, to $6.38 (−14.7 cents), that is just 2.3% below the record and 70% above a year earlier.
The reading is a Monday snapshot; what follows will depend on crude, which rose again 4.4% on 1 October. Diesel costs about $1.92 per gallon more than gasoline ($4.465). Regional differences are large: $7.36 on the West Coast (in California $8.18) versus $5.96 on the Gulf Coast.
Ahead of the midterm elections in November, political pressure is increasing. Donald Trump said on 27 September that he is considering a diesel export ban “very seriously.” The White House denies that a 90-day restriction has been decided, and cabinet members such as Energy Secretary Chris Wright are opposed. As of 1 October there was no decision.
Alternatives are also on the table: a new extension of the Jones Act waiver (in force until 15 November), tax relief and relaxation of rules for cheaper dyed diesel. At the same time Washington is pressing Europeans to release diesel stocks (editor’s note: yesterday the release of stocks by the G7 was announced).
A ban would remove about 1.5 million barrels per day from the global market. It would temporarily increase supply in the domestic market, but would deprive Europe and other importers of cargoes and, as Goldman Sachs warns, could raise the price of gasoline if refineries change their production mix.
The US Energy Information Administration (EIA) forecasts de-escalation to $4.40 in 2027, but not a return to 2025 conditions. Its assumption for Brent at about $90 in the second half is lower than today’s level around $100, so the forecast risks are tilted upward.
Europe: A permanent importer in a tight market
Europe has a structural diesel deficit and relies on imports. It is therefore vulnerable when cargoes from the Gulf dwindle or when the US restricts its exports. Prices in the EU have risen about 40% since the start of the year for diesel and 29% for gasoline.
In the 28 September bulletin, the weighted average diesel price rose to €2.24 in the EU and €2.27 in the eurozone, to new highs. ECB experts estimate that the refining margin adds €0.41 per liter to eurozone diesel, 19% of the pump price, versus €0.17 (8%) for gasoline. The diesel margin is expected to peak in October. In France diesel exceeded €2.40 in September.
The crisis is also spreading to kerosene: about half of European aviation fuel imports in 2025 came from the Middle East, and Saudi Arabia canceled crude cargoes for European refineries in October.
Why Europe pays much more than the US
$6.38 per gallon corresponds to about €1.47 per liter, versus €2.21 in Greece (before the 1/10 subsidy increase). The difference is mainly tax-related, but is also affected by transport costs, marketing margins and different specifications.
| Per liter | US | Greece |
|---|
| Retail price | ≈ €1.47 | €2.21 |
| Excise tax | ≈ €0.06 (federal) | €0.41 |
| VAT | – | ≈ €0.43 |
| Total basic taxes | – | ≈ €0.84 (about 38% of the price) |
Column estimate: exchange rate about 1.15 $/€ and VAT 24%. The US amount does not include state taxes.
Greece: Expensive pump prices from taxes and exposure to refineries
Diesel was moving at €2.21 per liter on average on 30 September (daily bulletin of the Observatory: €2.214, with unleaded at €2.207) and, after the subsidy increase from 1/10, is expected at about €2.16.
In Attica it was €2.19 and in Thessaloniki €2.20, while the range by station reaches up to €2.41 and prices are higher on many islands. Compared with a year earlier the increase is about 43% (€1.544 in the corresponding month of 2025). Without the existing subsidies and discounts the price would be about €2.37. Greece is at the European average.
The pressure has already triggered inflation. ELSTAT inflation reached 5.1% in September from 3.8% in August and 3.4% in July, with price increases in natural gas, diesel and heating oil. In the eurozone it was 3.2% (final Eurostat figures, from 3.3% in the first estimate), with energy rising 14.3% year-on-year and adding 1.29 percentage points.
The first estimate for September is announced today, with analysts expecting about 3.6%. The direct contribution of the two fuels to Greek inflation is estimated at about 0.76 percentage points, without the indirect effect through transport and food.
Greece, however, is not only a consumer. The four refineries of Motor Oil and HELLENiQ ENERGY have a total capacity of 25 million tons and export a significant part of their production. About 45-50% of their output is diesel and jet fuel. According to Eurobank Equities, the margins of the two products approached $80 per barrel in the summer. Motor Oil reported net profits of €686 million in the first half, while the bill for the discounts the two refineries have been giving on diesel and unleaded since mid-July is estimated at €85-90 million.
This creates a contradiction: businesses and households pay more for fuel, while refining benefits from the same margins. One political question is how much of this can be passed on to the consumer without harming investment and export competitiveness.
Subsidy or tax cut?
On Wednesday 30 September the prime minister announced at the Cabinet meeting that the pump subsidy for diesel is increasing from 10 to 15 cents per liter (12 cents plus VAT, from 8 cents plus VAT), for the period 1-15 October. Together with refinery discounts, which HELLENiQ ENERGY extended until 14 October, the total relief reaches about 20 cents per liter.
For heating oil, which becomes available from 15 October, the goal is for the price to remain below €1.75 per liter, with details before 15 October. The measures will be reviewed every 15 days.
The government is also submitting to Brussels a proposal for extraordinary fiscal flexibility for member states, with a letter to the president of the Commission and the president of the Eurogroup. The reduction of the excise tax, which would require EU approval, is not included in the interventions. The package also includes expanding the 72-installment arrangement to 120.
The three tools have different advantages:
What tools exist to address the crisis
| Tool | Pros | Cons |
|---|
| Horizontal subsidy per liter | Fast, simple to implement | Benefits disproportionately those who consume more |
| Excise tax reduction | Immediate effect at the pump | Requires fiscal space and EU approval |
| Targeted support (professionals, farmers, vulnerable households) | Fiscally controlled | Administratively more complex, slower |
My view: the critical criterion is not to make permanent a cost that could be temporary. As long as the crisis lasts, generalized subsidies cost a lot and do not change market fundamentals.
Outlook: Three scenarios
Indicative rule: every $10 per barrel change in crude or in the margin corresponds to about 7 cents per liter at the Greek pump, including VAT. This is the column’s estimate, not a fixed relationship: the pass-through depends on the adjustment time and on whether it is Brent or diesel itself that is moving.
The three scenarios for the diesel market
| Scenario | Condition | Impact on diesel |
|---|
| Base | Passage through Hormuz remains fragile and product shipments limited. Trump recently rejected the Iranian plan for opening within seven days. | Tightness at least until Q1 2027, as storage markets indicate. Margins peak in October, then slow de-escalation from high levels. |
| Relief | Agreement for gradual opening of the Strait. Talks are underway with Qatari mediation. The White House says it is open to easing sanctions if there is concrete progress. | Fall in Brent and retail prices. The damage to Russian refineries, however, may keep margins high. Previous agreements, such as the 17 June memorandum, collapsed quickly. |
| Escalation | Resumption of hostilities, attacks on tankers and infrastructure, or a US export ban. | New rise, with winter bringing competition from heating oil. |
The energy shock is another tax on growth
The rise in diesel acts like a tax on the real economy: it pressures transporters’ margins, increases the cost of agriculture and burdens businesses that depend on vehicles, machinery and generators. In Greece, exposed sectors are agrifood, logistics and transport.
For Europe, the problem is that the shock is simultaneously inflationary and recessionary. On 10 September the ECB raised its three key interest rates by 25 basis points, with the deposit rate at 2.50%.
Its forecasts show inflation at 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, with growth of 0.9%, 1.4% and 1.5% respectively. The ECB is not raising rates because only diesel is becoming more expensive, but the energy shock keeps inflation above target, complicating its policy while pressuring growth.
The conclusion
The diesel crisis is not a simple matter of expensive crude. It is the coincidence of three pressures: a Hormuz that remains fragile, Russian refining that is being hit, and inventories that are insufficient. The price at the pump will be determined by whether fuel flows from the Middle East are fully restored, whether Russian refining recovers and how quickly inventories are rebuilt.
The market is not pricing in a sudden normalization, but rather a prolonged period of high and volatile prices, with whatever relief may come being gradual. In general, we will tighten our belts even more.
Sources: US: EIA (Today in Energy 14/9, Short-Term Energy Outlook September, weekly price bulletins 21/9 and 28/9 and inventories 25/9) via weeklydiesel.com, worldoilmonitor.com, Logistics Management and Energy News Beat, Reuters (21/9), Irish Times (30/9), Watt-Logic (1/10), CNBC (28/9, 1/10), Bloomberg (23/9), Europe: European Commission Weekly Oil Bulletin (21/9 and 28/9) via Euronews (19/9), fuel-prices.eu and IndexBox, S&P Global Platts (21/9), Euronews (France), Greece: TA NEA (29/9), Liquid Fuels Price Observatory (30/9), Cabinet 30/9 (Alfavita, Newsbeast, Mononews, To Vima), BusinessNews and Creta24 (1/10), ELSTAT, Madata.gr and Economistas.gr (measures, inflation), Eurobank Equities, Goldman Sachs, Mononews (Motor Oil), iEnergeia (refinery discounts), Inflation and interest rates: Eurostat (final August figures, 17/9), ECB (decision and projections 10/9/2026), Crude and geopolitics: CNBC (24/9, 28/9, 1/10), Bloomberg (29/9), OilPrice.com, TASS, Moscow Times and Anadolu (Russia, 30/9), Enerdata, CNN Business, Hydrocarbon Processing, Kpler (via Time News).
* Nicholas Havoutis has many years of experience leading strategic financial units, having served as an executive at JPMorgan (New York), Chase Manhattan Bank (London) and Eurobank (Athens). At the same time, he has a significant presence in the media sector. Today, as head of SoZone Limited, he advises businesses and investors on international growth, organic optimization and mergers and acquisitions strategies.
