Goldman Sachs just doubled its profit forecast for diesel refiners, and the reason is a cascade of war damage that has knocked out refineries across the Middle East and Russia faster than anyone anticipated. The bank now expects U.S. refiners to earn $63 per barrel on diesel by 2027, up from an earlier estimate of $27. For European refiners, the forecast jumped from $19 to $49 per barrel. Those are not rounding errors. They represent a fundamental reshaping of where fuel comes from and what it costs.

The mechanism is straightforward. When a refinery goes offline, the world does not simply get less refined fuel from one place and more from another. Refining capacity is fixed, specialized, and slow to rebuild. Goldman's commodity analysts reported that refinery outages are currently running 60% above the seasonal average. That tightness, they wrote, will extend into next year.

Diesel is at the center of this. It powers the trucks that move groceries, the ships that carry goods across oceans, the farm equipment that harvests food, and the construction machinery that builds homes. When diesel gets expensive, those costs travel up the supply chain and land on consumers.

The geography of the shortage

Fuel exports from the Persian Gulf are running at roughly 40% of pre-war levels, according to Goldman. That compares to crude oil exports, which are still flowing at an estimated 70 to 80% of their pre-war rate. The gap matters: the world has more ways to work around a crude oil shortage than a refined diesel shortage, because crude still has to be processed somewhere before it becomes usable fuel.

Several refineries in the Middle East have suffered direct damage from the U.S. and Israeli war with Iran. Russia, facing production losses from Ukrainian drone attacks on its own refining infrastructure, has banned diesel exports. Moscow recently extended that ban through the end of September.

In the United States, the spread between the cost of crude oil and the price of refined diesel products (sometimes called the crack spread, a measure of refining profit) hit triple digits for the first time ever earlier this month. That is a record, and it explains why refining companies are posting enormous profits even as the broader economy feels the pinch.

Europe is in a tighter spot. Beyond the supply disruptions from the war, the European Union has fewer refineries than it did a decade ago. Climate regulations pushed energy companies to reduce refining capacity in anticipation of falling fuel demand. That demand reduction has not yet materialized to the degree expected. The result is a continent with less cushion to absorb a global supply shock.

What this means at ground level

Oil prices themselves jumped more than 3% Monday after U.S. forces struck Iranian rocket launchers near the Strait of Hormuz, the narrow waterway through which a significant share of the world's oil and fuel flows. Brent crude, the international benchmark, rose to $91.40 per barrel. That price feeds directly into the cost of diesel, which feeds into the cost of nearly everything that moves.

For American households, the transmission is mostly indirect but real. Trucking companies that pay more for diesel pass those costs to retailers. Retailers pass them to shoppers. The effect shows up as prices that stay elevated even after the headline number at the pump has moved.

The broader pattern here is one of infrastructure fragility. Decades of globalization built a fuel supply chain that is efficient under normal conditions but brittle under stress. The assumption was that refining capacity would expand in stable regions as demand grew. Instead, capacity in unstable regions is being destroyed faster than it can be replaced elsewhere. Goldman's doubled forecast is not a prediction about a single commodity. It is a signal that the system is under a kind of stress it was not designed to handle.