How Global Refinery Outages Are Tightening Fuel Markets Before Winter

The often-cited figure of 2.5 million bpd of Russian capacity knocked offline is a reasonable aggregate estimate: early 2025 saw roughly 10% of Russian capacity hit, and by September 2025, strikes had closed facilities processing about 1.1 million bpd in a single wave . By mid-2026 the cumulative damage is far larger.

Market Tightening: Diesel, Jet Fuel, and Gasoline

Diesel is "at the epicenter" of the squeeze. Global refining activity fell to its lowest seasonal level since the 2020 pandemic, according to Goldman Sachs, with middle-distillate inventories running below seasonal averages . War-induced outages in Russia and the Middle East have collapsed global diesel supply, while increased output from the Americas and Africa has offset only about a third of the lost supply .

European diesel and jet fuel refining margins surged past $40/bbl in late 2025, hitting their widest in over two years. Diesel cracks reached $43.64/bbl against Dated Brent on November 18, 2025, the highest since January 2023; jet fuel premiums hit $41.19/bbl, the highest since September 2023 .

Gasoline markets are also tight. Central Russian refineries that account for roughly 30% of the country's gasoline output were forced to halt or reduce production after drone strikes in May 2026 . Russia imposed a ban on gasoline exports through July 2026 and is considering a ban on diesel exports to contain domestic prices .

Key Forward Risks

1. Repair delays. The Moscow refinery hit by drone attacks in June 2026 will take at least six months to repair and is unlikely to resume production in 2026 . Many unplanned outages carry no repair timeline at all .

2. New strike threats. Ukraine doubled the number of refineries targeted in January–May 2026 versus the same period in 2025 — 16 refineries hit compared with eight — and the pace has continued to accelerate . The International Energy Agency expects drone hits to suppress Russian refinery runs at least through mid-2026, and the campaign is ongoing .

3. Winter heating demand. Diesel and heating oil demand rises sharply in Q4 in the Northern Hemisphere. US heating oil demand surged 40% week-over-week through November 14, 2025, as an Arctic blast drove heating degree days 22% above the 10-year average . With inventories already low and a meaningful share of global refineries still offline, any further disruption would compound tightening .

4. Permanent structural shrink. Beyond war damage, the global refining sector contracted by 350,000 bpd in Q2 2025 from permanent closures in Europe and China, and net capacity may shrink further . BloombergNEF expects overall nameplate capacity to reduce by 188,000 bpd in 2025 .

Impact on Russia's Crude Exports and Fuel Imports

Crude exports have surged as a release valve. When refineries are down, crude that would have been processed domestically is pushed onto export markets. Russia's western-port crude exports hit an 8-month high in May 2026 (+15% month-on-month) and a record high nearly 3 million bpd in June 2026 as drone attacks curbed refining .

The relationship is dynamic. When Ukraine temporarily shifted strike targets away from refineries in late July 2026, Russian crude exports fell below 4 million bpd as more crude stayed home for processing . Any resumption of refinery strikes would likely push exports higher again .

Russia is also becoming a fuel importer in some regions. The domestic fuel shortages are acute enough that Russia is contemplating a ban on diesel exports and has seen domestic gasoline and diesel supply tighten severely . In June 2026, Russian-controlled Crimea declared a state of emergency over fuel shortages and banned fuel sales . By July 2026, most of Russia's regions were experiencing fuel restrictions . The Kremlin faces a trade-off: export crude to keep revenue flowing, or try to keep enough refinery capacity online to avoid politically damaging fuel shortages at home.

Bottom Line

The global fuel market is heading into winter with the tightest distillate fundamentals in years, driven by a confluence of war, permanent closures, and unplanned failures that the crude oil market alone cannot solve. With repair times uncertain, drone strikes accelerating, and inventories already below seasonal norms, the risks for diesel, jet fuel, and gasoline prices are skewed firmly to the upside.