Diesel Supply Down 8%: How the Shortage Will Affect Trucking and Freight Costs

# Why this matters for trucking

# What caused the squeeze

Russia: Ukrainian drone attacks have damaged refining infrastructure, taking between 30% and 50% of Russia's 6.5-million-barrel-per-day refining capacity offline or forcing cutbacks. Before these strikes, Russia was exporting about 800,000 barrels per day of diesel. Repairing large refinery equipment under sanctions will slow recovery and could take months or years.

Middle East: Houthi drone and missile strikes have shut down Saudi Arabia's East-West Pipeline, which moved crude to Red Sea refineries and supplied Europe. The Jizan refinery (about 400,000 barrels per day capacity, producing more than 200,000 barrels per day of diesel) was struck. Diesel exports through key waterways were previously running at large volumes, and disrupted tanker traffic through the Strait of Hormuz further reduced shipments.

# Current market effects

Diesel is trading at a premium to crude and gasoline, reflecting acute distillate tightness. Regional details matter: California diesel prices approached very high levels, affecting truck and rail operations around the ports of Los Angeles and Long Beach, which handle a large share of U.S. container imports.

U.S. East Coast inventories are at their lowest seasonal level since 1982. Domestic refineries are operating near full capacity, leaving little room to increase output quickly. European refiners have been buying spot cargoes to replace lost Middle East shipments, which increases global competition for cargoes and moves attention to U.S. Gulf Coast exports.

# Practical implications for freight operators and shippers

• Operating costs will rise. Higher diesel is already showing up in pump prices and will be folded into freight costs and delivered goods.
• Margins will tighten. When diesel rises faster than freight rates, carriers and brokers face a squeeze that can force rate negotiations or surcharges.
• Winter exposure. Low East Coast distillate stocks mean heating-oil users in the Northeast may face very high delivery costs this winter if diesel remains elevated.
• Limited short-term fixes. With domestic refineries near capacity and major outages overseas, meaningful supply relief looks unlikely in the near term.

# Things to monitor

• Repair progress at Russian refineries and whether sanctions materially slow parts and maintenance.
• Status of pipeline and refinery operations in the Red Sea corridor and Strait of Hormuz shipping lanes.
• Diesel crack spreads versus crude and gasoline—widening spreads indicate persistent distillate tightness.
• Regional inventory draws, particularly on the U.S. East Coast, as winter approaches.

# Bottom line

The combined impact of Russian refinery outages and Middle East export disruptions has materially reduced global diesel supply. That reduction is raising fuel costs, weakening margins for freight operators, and creating acute inventory risks as winter demand rises. Expect higher costs to flow through contracts and spot markets until either refinery capacity is restored or alternative supply is found.