A Supply Shock Visible in the Refineries

The US figures are the most telling. Between May and September 2026, US refinery utilization exceeded 95% of capacity, a level these months had not seen since 1998. For reference, the average for these five months since 1991 stands at 92%, versus 88% for the other seven months of the year. The gap is therefore three points against the seasonal norm, which is significant in an industry already running near its technical maximum.

The explanation lies in a global imbalance in distillates. Diesel has hit record prices, driven by the war in Iran and Ukrainian strikes on Russian refineries. Margins have become so attractive that US refiners have sought to meet very strong international demand for their diesel exports. The Trump administration has also encouraged them to produce more.

A Physical Limit: Capacity

The picture has a ceiling, however. While the utilization rate is the highest since 1998, total output is only the highest since 2019. The reason is mechanical: US refining capacity has fallen 4% since 2019. In other words, refiners are compensating for lost infrastructure with intensity of use. This strategy has a ceiling, and it exposes facilities to increased wear, even though the file does not quantify this risk.

India Protects Its Domestic Market

The same shortage is visible on the other side of the globe. Since March 27, New Delhi has revised its export levies on fuels every two weeks, based on international prices for crude, gasoline, diesel and aviation kerosene. The objective is explicit: discourage foreign sales to guarantee retail fuel availability.

For the period beginning October 31, the levy on exported diesel rises from 8.5 to 11.5 rupees per liter, an increase of about 35%. The levy on aviation kerosene rises more modestly, from 10.5 to 11 rupees, while the levy on gasoline is cut to zero. The signal is clear: diesel is the molecule the country wants to keep.

The decision comes as Indian diesel exports reached 700,000 barrels per day in October, their highest level since September 2025, driven by a global shortage particularly acute in Europe. Analysts at Kpler expect a pullback to 500-550 kb/d in November-December as seasonal domestic demand peaks, then a rebound to 550-600 kb/d in the first quarter of 2027. That represents a decline of one-fifth to more than one-quarter in exported volumes in the near term. Heavier maintenance in the second quarter of 2027 would then curb shipments, with new capacity only weighing materially later in the year.

Profits That Follow Scarcity

In this context, integrated players' profitability is soaring. BP's earnings quadrupled in a year, and its stock gained 39%. ExxonMobil and Chevron beat forecasts on the back of higher domestic refining margins linked to the conflicts in Iran and Ukraine. TotalEnergies sees its third quarter buoyed by a refining boom. The common thread in these results is downstream: it is not only the price of crude that benefits the majors, but the spread between crude and refined products.

The causal chain is therefore coherent. Diesel scarcity drives margins higher. Margins push refiners to run flat out and export. Exporting countries, mindful of their own supply, tax their sales, which tightens available supply on the international market further. Each step feeds the previous one.

What the Data Does Not Allow Us to Assert

Several elements call for caution. First, the intensity of the phenomenon is not constant: in October, US refinery utilization retreated from summer peaks, while remaining above the 2021-2025 seasonal average. Second, the file contains neither quantified refining margins nor diesel prices: the link between distillate tightness and profits rests on converging observations, not on a quantitative series. The figures published for BP are moreover inconsistent across headlines ($4.7 billion and $8.6 billion), which means only the direction should be retained.

On the European gas side, physical flow readings for October 30 and 31 show abrupt gaps, for example at Emden, where the entry from Norway falls from 402.5 million kWh per day to 77.6 million, or at Oberkappel, whose exit drops from 112.5 to 22.6 million. Such movements resemble incomplete end-of-period readings, and one measurement point, Zevenaar, is not reported. No causal link with the diesel market can be drawn from this. Day-ahead electricity prices for October 30, around 250 euros per MWh in Czechia, Denmark (DK-1) and Switzerland, versus 77.51 in Finland, merely recall that European energy pressure is unevenly distributed.

A Proportionate Conclusion

The facts establish that distillate is today the most constrained link in the oil chain: it explains utilization rates without equivalent for more than a quarter-century, a restrictive export policy in New Delhi and solid results for the majors. They establish neither the duration of this regime nor its exact magnitude. The expected pullback in Indian exports and the October decline in the United States suggest a tension that evolves with the seasons rather than a uniform shock. The next useful milestone will be the next fortnightly revision of Indian levies and the evolution of refining margins, which the current file does not allow us to measure.

This article was written with the assistance of artificial intelligence and verified by our editorial team.