The Disconnect Between Fuel Prices and the Price of Crude Oil
On the 9th August, the Benchmark Brent Futures for October hit $84.11p/bl (per barrel) which is still well below the highest price per barrel of $126.41 recorded on 30th April 2026, as Iran continues to demand tougher concessions in on-going negotiations with the United States. Global Benchmark Brent Crude was trading at circa $72.30p/bl on 27th February 2026, the day before the USA launched its attack on Iran, and even though the price is currently about $14p/bl higher, the price for diesel and petrol remain inflated at the pumps due to record premiums over crude oil.
Experts advise that if indeed the Strait of Hormuz reopens, consumers and businesses will not see a reduction in fuel at the pumps, as the gap between crude oil and its refined products has spiked in recent weeks. Analysts note that the diesel commodity is currently trading at a premium of roughly $70 per barrel over crude oil. While slightly down from its recent record high of $90 per barrel, this remains far above historical levels of around $20 per barrel.
Analysts advise that this current disconnect is due to the global shortage in refining capacity, with some of the world’s largest refiners being cut off by the closure of the Strait of Hormuz. Furthermore, China is currently restricting exports of refined products, and Ukraine’s drone attacks on Russia’s refineries has not helped matters.
A number of experts point out that global inventories are diminishing by the day and Europe is particularly vulnerable due to years switching investments to green energy, ignoring investing in refineries, and are now reliant upon imports for much of their domestic consumption. In Europe, analysts advise another reason that diesel is trading at a higher than normal premium is because the marginal barrel price of diesel in Europe is becoming more expensive, due to the market paying a higher price to pull replacement barrels into a physically tight European system.
Europe is also facing upward pressure on diesel and petrol prices as energy supply chains begin to run out of water. The water levels in the Rhine are reaching record lows which is restricting barge traffic, and in turn it has pushed gasoil freight rates to record levels. Authorities will now have to adapt energy supply routes to these critical weather conditions, which experts estimate will not be ending any time soon, placing further upward pressure on fuel and energy prices. In fact, experts warn that Europe could face a serious diesel shortage this winter due to limited domestic refining capacity and its heavy reliance on imports.
Experts note a deal to reopen the Strait of Hormuz remains distant. Tehran has rejected direct talks with the United States, and even though Iran and Oman are apparently close to agreeing terms on shipping lanes within the Strait, Iran has said they will not reopen the Strait unless the United States accede to their demands. The US/Iran/Israel continues to drag on, and analysts advise that refined crude products could well increase in price as the months go on.
