Refiners Benefit As Global Diesel Shortfall Persists

“This refining challenge is going to be with the world for a while.”

Darren Woods ExxonMobil CEO on a CNBC interview this morning. (7/31/2026)

The world seems to be waking up to the squeeze on diesel products in particular as this week’s earnings reports shed light on the reasons for record-setting margins from refiners who are able to operate. The loss of distillate exports from Russia, Saudi Arabia, Kuwait and China is creating a supply gap that the U.S. and India can’t come close to filling, even though they’re pulling out all the stops to do what they can. See the tables and charts below for estimates of how this lack of diesel may play out under different war and weather scenarios.

Diesel prices are leading the charge once again this morning, with the expiring August ULSD contract up more than 8 cents/gallon, while the September contract is up about 7.5 cents as we approach 8am central. Gasoline is seeing the inverse pattern so far today with spread weakness pushing the first 4 monthly contracts into the red (August RBOB down 4 cents, September down 2.5) while crude oil prices are seeing gains of around $1.50/barrel so far. Reminder for those in markets that haven’t already rolled to reference September futures to be watching the RBU and HOU contracts for price direction today.

ExxonMobil’s 2nd quarter earnings report showed the expected huge growth in both upstream and refining earnings which drove total earnings north of $14 billion for the quarter compared to $4 billion a year ago. Record diesel production from Exxon’s refineries was a key component in the earnings surge even while scheduled maintenance at some of its facilities limited output, while its chemicals group saw earnings spike 1000% from a year ago to $1.2 billion during the quarter.

Ukraine hit 2 more Russian refineries overnight, increasing its monthly record with 20 strikes in July alone, which has contributed to Russia’s ban on distillate exports being extended through January. Reuters also reported that Ukraine’s drones also forced the CPC Export terminal to close for a 3rd time this month, which is limiting 2 million barrels/day of exports from Kazakhstan, of which both ExxonMobil and Chevron are key producers and could put a small damper on their results for Q3.

ADM Announced plans to drastically increase its soybean crushing capacity as record high RIN prices drives demand to produce more fuel from crops that are better suited to food. Read here to see why Renewable Diesel produced from soybean oil is much worse for the environment (and much more costly) than RD produced from waste oils and animal fat.

Delek reported a brief upset in an FCC unit at its 73mb/day Big Spring TX refinery yesterday caused by validation of a valve repair. That upset lasted only minutes and does not appear to be impacting operations.

Citgo also reported an FCC unit upset at its 167mb/day Corpus Christi East plant, due to a sudden valve failure. That unit was forced to shut due to the incident Wednesday night, but restart was already underway Thursday.

Few details have emerged about Citgo’s 183mb/day Lemont (Chicago) IL refinery after storms knocked multiple units offline Monday afternoon. Chicago basis levels have seen a healthy rally following the upset at that facility and the P66 Wood River IL refinery that had a power outage last week, but the moves have been relatively tame compared to what we’ve seen following past upsets, so it would appear that the facility did not suffer major damage.