Diesel cracks hit record highs as Russian export ban tightens supply
Diesel cracks hit record highs this week. Russia's ban on diesel exports, Ukrainian drone strikes on its refineries, and renewed fighting around the Strait of Hormuz cutting Middle East product flows have left middle distillate tight. For US haulers that means the rack price you pay is climbing, and nothing in the news points to quick relief.
The refiner meeting
Trump pressed US oil refiners in a closed-door meeting Sept 1 to push more gasoline and diesel out the door, with pump prices and November's midterms on his mind. A White House official said the talk covered regulatory changes, faster permitting, and more investment, and that industry reps were aligned with the goal. None of that lowers a rack price this month. Permitting and new capacity move in years.
Crude inventories
EIA reported crude stocks fell 4.5 million barrels in the week ending Aug 28, to 424.5 million, still about 1% above the five-year average. Refinery runs hit an eight-year high. Refiners are running flat out and the crude draw shows it, yet the product side stays tight because the war keeps pulling supply off the water. European refiners are meanwhile pulling near-record margins on gasoline.
Brent fell 0.5% to $94.71. That is a war price, six months into the US fight with Iran.
Venezuela deals
Energy Secretary Chris Wright is expected to announce more than a dozen agreements with energy companies in Caracas, the largest with Chevron, which is expanding operations across two large oil fields. Wright said China won't have debt claims on revenue from the new production and that a debt restructuring is underway. More Venezuelan heavy crude, if it lands, could ease the medium and sour slate US Gulf refiners are built to run. That is quarters out, not this week.
RIN reallocation
Biofuel groups and the ISA pushed back on EPA's small-refinery hardship waivers and how the agency is reallocating the RIN obligations tied to them. If waived gallons don't get reallocated onto other refiners, RIN values move and every obligated party's compliance cost shifts with them. The fight is over whether EPA holds the reallocation or lets the waived volumes disappear.
What to watch
Whether Middle East product flows restart through Hormuz. Crude flows are estimated to have rebounded, but diesel is where the squeeze is, and LNG traffic through the strait is still stopped. Watch the next EIA distillate draw, whether Russia extends its diesel export ban, and whether EPA's RIN reallocation survives the biofuel pushback. Any one of those moves what US buyers pay for diesel before the Venezuela barrels ever show up.