Goldman Sachs: Refining Capacity Constraints May Keep Diesel Prices Elevated Through 2027
nashnova research
Goldman Sachs expects global diesel crack spreads to stay above $40 per barrel through 2027 — double the historical norm — as shrinking refinery capacity and decade-low inventories force high prices to act as a demand rationing tool just to keep the market in fragile balance.
Why does diesel need to stay this expensive for this long?
Goldman forecasts that diesel and jet fuel crack spreads — the premium refined products command over crude — will average above $40/bbl in 2027. The historical norm is roughly $20/bbl.
This means → the "processing fee" for turning crude into diesel has doubled, not because demand is surging, but because there isn't enough refining capacity to go around.
Nikhil Bhandari, Goldman's co-head of Asia-Pacific natural resources research, said it plainly: product prices must stay high enough to keep "a degree of demand destruction" in place next year.
In plain terms = the high price is the mechanism, not a side effect. It has to stay painful enough that some users cut back — otherwise supply and demand cannot balance at all.
How big is the refining capacity gap?
Goldman estimates 2026 will be another year of negative refining capacity growth — capacity outside China is expected to shrink by roughly 300,000 barrels per day.
At the same time, about 2 million bpd of Middle Eastern refining capacity remains offline; damaged Russian refineries further squeeze diesel supply; and U.S. refiners — which ran at elevated rates to fill the gap — now need deferred maintenance, temporarily cutting output.
This means → the world's three major refining regions — the Middle East idled, Russia damaged, the U.S. due for repairs — are all short-handed at once, with no quick substitute.
Goldman estimates global product inventories could fall to their lowest days-of-supply since 2015 by end-2026. Baden Moore, analyst at CLSA, notes that rebuilding stocks while meeting demand could take up to two years.
Can the G7 stockpile release fix this?
The G7 announced it would release 100 million barrels of crude and product reserves over four months, with a "front-loaded diesel release" in the first 20 days. European diesel futures fell 5.75% on the news.
But several analysts are skeptical. Saudi Aramco CEO Amin Nasser said emergency reserves "may get through one winter" but cannot solve the long-term supply problem.
In plain terms = a stockpile release is like withdrawing savings to cover an emergency — it buys time, but the balance shrinks, and it takes even longer to build back up afterward.
CLSA's Moore added: the release buys time, but inventories are being drawn down rather than rebuilt — restocking itself becomes a longer-term source of demand.
What happens if demand bounces back?
Bhandari warned that if demand rebounds next year, global refineries would have to run at their highest utilization rates in nearly two decades.
This reflects a deeper fragility: the system is already running at near-full capacity, with no cushion left for surprises.
Moore emphasized that underlying demand fundamentals remain intact — buyers are balancing the market through inventory management, reserve drawdowns, consumption compression, and refinery optimization.
This means → demand is suppressed by price, not destroyed. If prices ease or the economy picks up, that pent-up demand snaps back — and capacity still can't keep up.
Where is crude oil price headed?
Goldman expects Brent crude to stabilize around $80/bbl as oil flows through the Strait of Hormuz gradually normalize.
This means → the crude side is relatively stable. The real bottleneck is not "is there enough oil?" but "is there enough refining capacity?"
In plain terms = there's enough grain in the field, but not enough mills to grind it — the constraint is midstream processing, not upstream extraction.
Bernard Aw, Coface's chief Asia-Pacific economist, agreed that the impact of stockpile releases is "temporary, not structural" — whether diesel prices can truly come down before 2027 remains the market's central open question.
市场有风险，内容仅供研究参考，不构成投资建议。