If crude oil is falling, why isn't diesel falling at the same rate?

Refined product supply, not crude, is the bottleneck. The diesel crack spread (refining margin) stood at $2.51 per gallon on November 9, 2026, nearly three times the $0.87 average from January-February. Refining now accounts for 40% of the pump price, versus crude at 35%. Middle East and Russian refinery outages, extended tanker voyages due to Hormuz and Red Sea disruptions, and U.S. distillate inventories 13% below five-year averages have all pushed refining margins to historic highs, decoupling diesel from crude price moves.

What is the diesel crack spread, and why does it matter for my fuel surcharge?

The crack spread is the difference between wholesale ultra-low sulfur diesel (ULSD) prices and crude oil costs. It measures refining profitability. On November 9, 2026, it was $2.51 per gallon. If your fuel surcharge is pegged to a weekly Brent index or an older formula, you're exposed to lag risk: the market moves faster than weekly resets, and crack spreads can swing sharply based on refinery utilization and product exports, not just crude moves.

How long will diesel stay expensive?

The EIA forecasts retail diesel at $6.05 in Q4 2026, easing to $4.80 by Q4 2027. However, this outlook carries high uncertainty because Middle East refined product exports remain fragile. Before the conflict, the Middle East exported 4.7 million barrels per day of refined product; it now exports only 1.9 million. Geopolitical stability and tanker route normalization are prerequisites for sustained price relief.

What should shippers and brokers do about fuel surcharges now?

Audit which price index and reset frequency your surcharge contracts use. Daily truck stop prices (SONAR DTS) diverge from weekly EIA averages by over 10 cents. Weekly indices lag the market in both directions, creating systematic exposure. Brokers embedding spot rate assumptions should refresh them weekly because crack spreads are highly volatile. Shippers should negotiate surcharge terms that reflect daily or near-daily pricing or accept wider risk bands.

Why are U.S. distillate exports at multi-year highs if supplies are tight?

U.S. refineries are running at 96% capacity with no spare capacity to increase domestic production. Distillate exports topped 2021-2025 highs in six of seven months through July because global demand is strong and international prices (driven by the tight global supply) are attractive. This pulls domestic inventories lower, exacerbating the scarcity premium. The U.S. has less refining capacity than in 2019, limiting flexibility to serve both domestic and export demand.

Procurement

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The signal

Truck stop diesel remains near record highs at $6.23 per gallon despite Brent crude falling 21% since late October 2026. The disconnect reveals that refining capacity constraints, not crude prices, now drive diesel costs. Refining margins (the diesel crack spread) have tripled from early-2026 levels to $2.51 per gallon, accounting for 40% of the pump price, while crude represents only 35%.

This structural shift stems from Middle East and Russian refinery damage, geopolitical disruptions extending tanker routes from 24 to 54 days, and thin U.S. distillate inventories running 13% below five-year averages. The Energy Information Administration forecasts retail diesel averaging $5.03 in 2027, up from prior expectations, with prices easing gradually through late 2027. For carriers, shippers, and brokers, the implication is clear: fuel surcharge mechanisms tied to weekly indices or outdated Brent correlations are now misaligned with actual pump prices.

The daily truck stop index diverges from weekly EIA averages by over 10 cents, creating margin exposure for carriers and pricing risks for shippers relying on lagging indices.

Frequently Asked Questions

What This Means for Your Supply Chain

Simulation Suggestion

strategic

What if tanker routes normalize and Red Sea/Hormuz disruptions ease by Q2 2027?

Model the impact of shipping routes returning to pre-disruption lengths (24 days from 54 days), global refined product exports recovering toward historical levels, and U.S. distillate inventories rebounding to five-year averages. Simulate the resulting decline in the diesel crack spread from $2.51 to $1.25 per gallon and the associated reduction in truck stop diesel prices.

Run this scenario

Simulation Suggestion

immediate

What if fuel surcharge indices diverge by 15+ cents from real-time pump prices?

Model the financial impact on a 500-truck carrier fleet of using a weekly EIA index that lags real-time SONAR truck stop prices by 15 cents per gallon. Calculate cumulative margin loss over a quarter and identify hedging or renegotiation strategies to realign surcharge timing with actual cost movements.

Run this scenario

Simulation Suggestion

this month

What if Middle East refinery outages persist longer than expected into 2027?

Assume that geopolitical tensions keep Middle East refined product exports below 2.5 million barrels per day through Q3 2027 instead of recovering to pre-conflict levels. Model the operational and cost impact on a national LTL or truckload carrier fleet, including extended high fuel surcharges and potential margin compression if surcharge contracts lag real-time pricing.

Run this scenario

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