Diesel Refining Margins Hit Record $117 a Barrel as Russia and the US Both Weigh Export Bans

Since Russia's diesel export ban first took hold and refining margins breached $100 a barrel in August, the squeeze has only tightened. The US heating oil crack spread, the rough measure of what refiners earn turning crude into diesel, hit $117 a barrel Wednesday morning, the highest level in Bloomberg data going back to 2009. NYMEX heating oil futures jumped 6.1% Tuesday to their highest settlement since 1986, according to ZeroHedge. European gasoil futures climbed 6.2% Tuesday to a record in data stretching back to 1989.

Russia is considering extending its diesel export ban through October, on top of a ban already running through September 30, according to ZeroHedge and the Atlantic Council. Separately, Senate Majority Leader John Thune told reporters Tuesday he's "open to exploring" a US diesel export ban of its own, ZeroHedge reported.

Why supply keeps shrinking

Three forces are colliding at once. Ukrainian drone strikes have knocked out at least 30% of Russian refining capacity, according to the Atlantic Council, pushing Russian product exports to their lowest level in twenty years, roughly 1.1 million barrels a day in July and August. The Strait of Hormuz has separately choked Persian Gulf refined-product shipments, with Gulf refinery output falling to 7.6 million barrels a day in the second quarter of 2026, down from 9.6 million a year earlier, per the Atlantic Council.

Meanwhile US refiners are running near full tilt, with utilization approaching an eight-year high near 98%, according to ChemNet News, leaving almost no spare capacity to absorb the shortfall. US distillate inventories have fallen to 14% below the five-year seasonal average, according to jamesinvestment, citing EIA data. Vitol Group CEO Russell Hardy estimates total lost global exports across both regions at roughly 4 million barrels a day, per Bloomberg.

The export-ban debate

The case for a US diesel export ban, as some in Washington see it, is straightforward: if American refiners stopped shipping diesel overseas, more of it would stay home and prices at the pump would fall. It's the same logic Russia used when it banned its own exports to protect its domestic market.

Barclays refining analyst Theresa Chen isn't buying it for the US case. In a note to clients Tuesday, cited by ZeroHedge, she said a ban would be "detrimental to the US refining complex and unlikely to provide the intended price relief," arguing US refiners have already been chasing higher distillate margins by shifting production, and cutting off exports could disrupt that balance rather than fix it.

China, meanwhile, is capturing much of the upside. Sinopec, PetroChina, CNOOC and Rongsheng Petroleum Chemical have seen sharp revenue growth from refined-product exports under Beijing's quota system, according to ChemNet News, which reported the Ministry of Commerce has allocated roughly 32 million tons of refined-oil export quotas for 2026 across seven market entities.

The political fight over blame

President Trump has pointed at Ukraine. "Mr. Zelensky has to do one thing: He has to stop knocking out diesel fuel in Russia," Trump told reporters Sunday, according to CNN. "It's hurting the world."

CNN's reporting notes the tension in that position: sources previously told the network the US had increased intelligence-sharing with Ukraine specifically to help it hit Russian energy sites, back when oil prices were lower. CNN also reported Trump claimed Monday that Russia and Ukraine had agreed to halt attacks on each other's energy infrastructure, which neither side had actually agreed to at that point.

Andy Lipow of Lipow Oil Associates estimates Russia's export ban, a response to the Ukrainian strikes, has pulled 800,000 barrels a day of diesel off the market, according to CNN. The Strait of Hormuz closure, by contrast, has affected 1.2 million barrels a day, a larger single factor than the Russian refinery strikes. Kremlin spokesman Dmitry Peskov told reporters a truce on energy strikes was "a very good idea" while separately claiming Russia's domestic market is "nearing full saturation" and the real constraint is export access, not production, a framing CNN describes as designed to deflect from the refinery damage.

What it costs at the pump

AAA's daily average retail diesel price hit $5.85 a gallon in early September, breaking the prior record of $5.82 set in June 2022, according to reporting cited by iamovers from FreightWaves and the Financial Times. The Atlantic Council put the average at $5.65 a gallon the week of August 24, up 52% year over year. Diesel has risen roughly $2.10 a gallon since the Friday before the Iran conflict began in late February, per iamovers.

Russia's current export ban is set to expire September 30. Whether Moscow extends it into October and whether Thune's exploratory comments turn into actual legislation will shape whether this week's records hold or get broken again before winter heating season peaks.