Diesel prices may need to remain elevated through 2027 to prevent a recovery in fuel consumption from overwhelming a strained global refining system, Goldman Sachs said, highlighting the prospect of another year of tight refined-product markets even if crude oil prices stabilize.
The investment bank expects global diesel and jet-fuel crack spreads, which measure the premium refined products command over crude oil, to average above $40 a barrel in 2027. That would be more than twice their historical level of roughly $20 a barrel.
Goldman’s outlook assumes Brent crude stabilizes at around $80 a barrel as crude flows through the Strait of Hormuz gradually return toward normal levels. But lower crude prices alone may not translate into cheaper diesel because the more immediate constraint is expected to remain refining capacity.
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“We need to keep product prices high enough to have a certain level of demand destruction continuing next year,” Nikhil Bhandari, Goldman Sachs’ co-head of Asia-Pacific natural resources research, told CNBC’s “Squawk Box Asia” on Monday.
The warning comes as the global oil market enters a potentially difficult phase. Consumers and businesses have cut fuel use and drawn down inventories in response to high prices and supply disruptions. If economic activity and fuel consumption recover while companies and governments simultaneously try to replenish those depleted stocks, refiners could face a surge in demand at a time when available capacity remains unusually constrained.
“If there is any demand rebound next year, we think the global refining system will have to hit the highest utilization rate that we have seen in the last two decades,” Bhandari said.
Refiners Face A Narrow Path
The pressure on refined products is being compounded by a deterioration in the global refining base.
Goldman expects 2026 to be another year of “negative refining capacity growth,” with refining capacity outside China forecast to decline by about 300,000 barrels per day. The bank also estimates that product inventories could finish 2026 below the lowest days-of-supply level recorded since 2015, according to its global Refining Super Cycle report published on September 21.
The situation is particularly acute in the Middle East, where roughly 2 million barrels per day of refining capacity remains offline, Bhandari said. Damage to Russian refining facilities has also reduced diesel availability, tightening an already constrained market.
U.S. refiners have been operating at elevated rates to compensate for capacity losses elsewhere, but that strategy has limits. Refineries that have postponed maintenance to maximize output will eventually need to undergo scheduled work, temporarily reducing processing rates and adding another source of pressure to refined-product markets.
The normalization of crude exports from the Gulf may therefore provide less relief than expected. While additional crude can restore feedstock availability for refiners, shipments of diesel, gasoline and jet fuel remain restricted, meaning higher crude flows do not automatically translate into greater availability of finished fuels.
Energy experts say that the current constraint is not simply a shortage of crude. It is the ability of the global refining system to convert available crude into the specific fuels consumers need at sufficient scale.
Baden Moore, resources and energy research analyst at CLSA, said recent weakness in fuel consumption should not necessarily be interpreted as permanent destruction of demand.
“Underlying oil-product demand remains largely intact,” Moore said in an email to CNBC, adding that buyers have instead balanced the market through inventory management, reserve drawdowns, consumption curtailment and refinery optimization.
Rebuilding those inventories while simultaneously meeting underlying consumption could take as long as two years, Moore said.
That creates a potentially persistent source of demand for refined products. Even if motorists, airlines, freight operators and industrial users return to more normal consumption patterns, some of the additional supply will need to go toward rebuilding stocks rather than satisfying new consumption.
Emergency Reserves Offer Time, Not A Solution
The prospect of tighter diesel markets has already prompted governments to intervene. Group of Seven countries agreed on Friday to release 100 million barrels of crude and refined products over four months, including a “front-loaded substantial diesel release” during the first 20 days. European gasoil futures fell 5.75% following the announcement as traders priced in the prospect of additional near-term supply.
But the relief may be temporary.
Saudi Aramco CEO Amin Nasser said Monday that emergency reserves “might buy us a winter,” but would not resolve the underlying supply problem.
“Emergency releases only solve a liquidity problem, not the underlying stock problem,” Moore said.
The releases provide additional fuel to the market in the short term, but they also consume inventories that ultimately need to be rebuilt. However, there is concern that it could create an unusual market dynamic in which government intervention suppresses prices temporarily while simultaneously creating additional demand for future restocking.
Bernard Aw, chief economist for Asia-Pacific at Coface, similarly said the impact of the releases would be “temporary rather than structural.”
The distinction between temporary relief and structural supply growth is central to the diesel outlook. Strategic stock releases can ease an immediate shortage, but they do not add permanent refining capacity. Nor do they repair damaged refineries or eliminate the need for maintenance at facilities that have been pushed to unusually high utilization rates.
For consumers, the result could be a prolonged period in which crude oil prices and diesel prices behave very differently. Brent settling around $80 a barrel would normally be expected to reduce pressure on transport and industrial fuel costs. But if refiners remain capacity-constrained and inventories need to be rebuilt, the refining margin could absorb much of that benefit.
Goldman’s forecast therefore points to a market in which diesel remains expensive not because crude oil necessarily stays exceptionally high, but because refined-product supply needs to remain sufficiently expensive to ration demand.
The backdrop has raised the risk that fuel-intensive industries, freight operators and consumers will continue to bear elevated costs well into 2027. At the same time, sustained high margins could eventually encourage additional refining investment and capacity additions, creating the conditions for a later easing of the refining super cycle.