Vitol CEO warns: Global diesel supply tight for winter 2026 — NRG-IA

"We continue to consume the existing global surplus and are practically at the bottom of our stocks," warned Russell Hardy, CEO of Vitol, on September 8 at the APPEC conference in Singapore. The statement comes at a time when the global supply of diesel and other refined petroleum products is simultaneously hit by reduced shipments from Russia and disruptions in the Middle East, just ahead of the seasonal winter demand surge. Hardy estimates that the market is missing approximately 2 million barrels/day of petroleum products from Russia and nearly another 2 million barrels/day from the Middle East . The issue is not just the amount of crude oil available, but the capacity of the global refining system to process crude into diesel and other products the economy needs. Vitol says refineries are not processing enough to halt draws on existing inventories. In this setup, the previously accumulated buffer is being consumed right before diesel enters its high-demand season. Crude is available, but refining capacity is the critical bottleneck The disconnect between the crude oil market and the refined products market is central to the current tension. According to Hardy, the Middle East continues to export about 9 million barrels/day of crude oil , but only around 1 million barrels/day of refined petroleum products . The availability of crude does not automatically solve the diesel deficit if the refineries processing it are disrupted, operating near capacity, or unable to sufficiently boost output. The war in Ukraine has damaged refining capacity in Russia, while Russian restrictions on diesel exports further reduce internationally available volumes. In the Middle East, conflict involving Iran has likewise disrupted some refinery operations and regional product flows. This combination explains why diesel prices can rise much faster than crude. The market is not just buying the raw material, but the refined product that can actually be used in transport and the wider economy. Refineries have increasingly little room to compensate for missing volumes Spare refining capacity worldwide is tight. Mark Senn, senior vice president of global trading at Phillips 66, pointed out that most US refineries are already operating at very high utilization rates. Under these conditions, rapidly increasing production to fully replace lost volumes from Russia and the Middle East is difficult. Senn warns that the cold season is starting with diesel inventories in a deficit position, which could sustain current market strength through the winter months. Vitol is already seeing the combined effect of high prices and tight fuel availability on global consumption. Hardy estimates that these conditions could reduce global oil demand in 2026 by approximately 1.5 million barrels/day compared to 2025 . In other words, the market is beginning to balance not only through higher supply, but also through demand destruction triggered by high costs. European diesel margins reach record highs over crude Physical pressure on the refined product is already visible in Europe. In the Amsterdam-Rotterdam-Antwerp hub, one of the main European centers for petroleum products, the physical diesel refining margin over crude reached a record $98/barrel on September 1 , according to S&P Global Commodity Insights. The indicator had eased to $95.30/barrel on September 2, but remained well above the average of $80.50/barrel in August , $71.71/barrel in July , and $44.75/barrel in June . This spread, known in the market as the diesel crack, measures the difference in value between diesel and the crude oil from which it is produced, serving as a key indicator of pressure on refined product availability. The surge from under $45/barrel in June to nearly $100/barrel in early September shows how rapidly refining economics have shifted in just a few months. For Europe, which is structurally dependent on diesel imports, such tightness can keep procurement costs high even if crude oil remains available on the global market. European Commission confirms supply security but warns of the coming months The official European assessment on September 8 clearly distinguishes the current situation from the risks of the coming months. The Oil Coordination Group—which brings together the European Commission, member states, industry, the International Energy Agency, the Energy Community, and NATO—concluded that the EU does not currently face a supply issue for crude oil and petroleum products . European demand for diesel and jet fuel is being met by higher output from EU refineries and alternative supplies from global markets. The Commission also notes that commercial and emergency stocks remain at sufficient levels . This assessment separates the status of European reserves from Vitol's warning about shrinking global product inventories and market surplus. Europe still has a security buffer and alternative supply sources. However, pressure could mount with the cold season. The…