Goldman Sachs says the diesel crunch is the biggest squeeze in oil markets, with global refining down 6.5 million bpd in July

Goldman Sachs commodity analysts said in a note carried by Bloomberg and reported on Thursday, 30 July 2026, that the biggest supply squeeze in oil markets is currently in diesel, with global refining activity at its lowest for this time of year since the 2020 pandemic. Diesel is "at the epicentre" of the fuel supply crunch, according to the bank.

According to the note, war-induced refinery outages in West Asia and Russia have collapsed global fuel supply, while increased output in the Americas and Africa has offset only about a third of the lost volumes. In July, global refining throughput slumped by as much as 6.5 million barrels per day compared with July 2025, with lower Chinese run rates also a factor. Global diesel exports fell about 35 percent in the same month, or 2.6 million barrels per day, and middle distillate inventories are below their seasonal average.

Despite extreme volatility in crude prices over the past five months, refining margins have held at record highs, even when crude reached $100 a barrel last week, because product supply is far tighter than crude supply. Fatih Birol, executive director of the International Energy Agency, said in a rare statement last week that refinery activity and product supplies have not picked up as much as crude deliveries, meaning markets for refined products including diesel and gasoline are considerably tighter than those for crude. For Iran, the squeeze bears on both world product prices and the value of refined exports.