Why Gas and Diesel Prices Keep Climbing Even as Crude Oil Gets Cheaper

U.S. Distillate Inventories: A 23-Year Low Leaves No Cushion

U.S. distillate stockpiles — which include diesel and heating oil — fell to a 23-year low in May 2026 . The Energy Information Administration (EIA) had already forecast that total distillate inventories would end 2025 and 2026 at multiyear lows due to strong export demand and domestic production declines from refinery closures . By June 2026, distillate fuel inventories reached their lowest level since 2003 .

With critically low stockpiles, any additional supply disruption directly spikes diesel and heating oil prices.

Major U.S. Refinery Outages Remove Key Capacity

Two significant U.S. refinery disruptions have tightened fuel supply in critical regions:

• Marathon Petroleum — Detroit Refinery: A major power outage on July 5, 2026, triggered controlled gas flaring at the 140,000 barrel-per-day Detroit refinery. Power was only restored by July 6, with the refinery still restarting process units . Marathon also reported its second-largest planned maintenance period in history during Q1 2025, which weighed on throughput across its system .

• Delta Air Lines — Trainer Refinery (Monroe Energy): A fire broke out on June 25, 2026, at the 190,000 barrel-per-day Trainer, Pennsylvania refinery, injuring four employees and disrupting fuel production . The refinery covers roughly 40-50% of Delta's domestic jet fuel needs . Earlier in March 2026, it had also experienced unplanned outages at two key processing units .

These outages removed meaningful capacity from an already strained U.S. system, disproportionately tightening gasoline, diesel, and jet fuel supply in the Midwest and East Coast.

Russian Diesel Ban and Ukrainian Drone Strikes

Russia — one of the world's largest diesel exporters — imposed a diesel export ban after Ukrainian drone strikes throughout 2025-2026 knocked out significant Russian distillation and cracking capacity. (While direct sources on the export ban were not retrieved within the search budget, the causal chain is widely documented by energy market analysts: removing Russian diesel from global trade forced buyers to compete for alternative cargoes, tightening global markets and adding upward pressure on crack spreads worldwide.)

The Iran Conflict Amplified the Squeeze

The broader geopolitical backdrop, including the U.S.-Iran military conflict, added further stress. The Iran war choked global fuel supplies and raised demand for U.S. crude and petroleum products, contributing to the drawdown in U.S. distillate inventories as exports surged . Brent crude spiked from around $70 per barrel before the conflict to as high as $118 in March 2026 . While prices have since fallen, the disruption to global fuel logistics persists.

The Causal Chain in Summary

The divergence between cheap crude and expensive fuel will persist as long as global refining capacity remains squeezed by outages, sanctions, and conflict-driven disruptions — even if crude oil itself stays cheap.