Goldman Sachs expects diesel prices to remain high through 2027 as recovering demand runs up against refinery constraints. The bank forecasts global diesel and jet-fuel crack spreads—the premium refined fuels command over crude—to average above $40 per barrel in 2027, more than twice their usual level of around $20. That outlook holds even as Brent crude is expected to stabilize at approximately $80 per barrel.
Refinery limits underpin the forecast
The pressure is on the refining margin rather than crude alone: a steadier Brent price would not remove the shortage of capacity to turn crude into diesel and other fuels. Goldman says prices need to remain high enough to curb some demand, reducing the risk that consumption rebounds faster than refineries can respond.
Nikhil Bhandari, Goldman’s co-head of Asia-Pacific natural resources research, said the global refining system could need to reach its highest utilization rate in two decades if demand rebounds next year. That would leave little room for unplanned outages or maintenance to reduce output further.
Demand may return as inventories are rebuilt
Recent softness in consumption may reflect buyers drawing down stocks and adjusting purchases, rather than a permanent drop in demand. Baden Moore, resources and energy research analyst at CLSA, said underlying oil-product demand remained largely intact, while inventory management, reserve drawdowns, lower consumption and refinery optimization had helped balance the market.
Moore said replenishing global inventories while meeting ongoing demand could take up to two years. For diesel buyers, that means restocking itself may add to demand even as companies and governments continue to need fuel—making the timing of the recovery important for prices.
Capacity is set to remain under strain
Goldman expects 2026 to bring another year of negative refining-capacity growth, with capacity outside China forecast to contract by roughly 300,000 barrels per day. Its global Refining Super Cycle report, published September 21, estimated that product inventories could end 2026 below the lowest days-of-supply level recorded since 2015.
About 2 million barrels per day of Middle Eastern refining capacity remains offline, Bhandari said, while damage to Russian facilities has further restricted diesel supply. U.S. refineries have been running at elevated rates to offset declining capacity, but deferred maintenance is expected to temporarily cut their operations.
Crude flows do not guarantee more fuel
Goldman expects recent crude flows through the Strait of Hormuz to normalize gradually, supporting its Brent outlook of approximately $80 per barrel. But the recovery of Gulf crude exports is not expected to substantially increase refined-product availability: shipments of diesel, gasoline and jet fuel remain restricted.
The distinction matters because crude oil must still be processed into usable fuels. More crude reaching the market can ease pressure on the feedstock price without resolving the bottleneck at refineries, leaving diesel and jet-fuel margins elevated relative to crude.
Emergency releases offer limited relief
Group of Seven countries agreed on Friday to release 100 million barrels of crude and refined products over four months, including a substantial diesel release during the first 20 days. European gasoil futures fell 5.75% after the announcement, but the price move does not establish that the underlying supply constraint has been resolved.
Saudi Aramco CEO Amin Nasser said emergency reserves might provide short-term cover but could not fix long-term supply. Moore said releases address a liquidity problem rather than the underlying stock shortage, while Bernard Aw, Coface’s chief economist for Asia-Pacific, described their effect as temporary rather than structural. If inventories are used instead of rebuilt, restocking could add to demand later.
Takeaway: Goldman’s forecast is that refinery limits and inventory rebuilding will keep diesel and jet-fuel margins unusually high through 2027, even with Brent near $80 a barrel.
References
- cnbc.com — “Goldman: Diesel prices may stay high through 2027”
- timesofindia.indiatimes.com — “New warning on oil: Goldman Sachs says crude prices could cross $120 if Strait of Hormuz disruptions continue – The Times of India”
- Roic News — “White House Urges EU to Draw Down Diesel Inventories as Export Restrictions Loom”
- energynews.oedigital.com — “Goldman predicts lower oil prices by 2026, as the supply increases”
- enerdealers.com — “Refiners’ Golden Age: How Record Margins Are Reshaping Energy and Fertilizer Markets”
