What’s That: Diesel Crack Spreads

Crude oil gets a lot of attention when fuel prices rise, but it is only part of what determines diesel prices. Right now, the cost of turning crude oil into diesel has become an unusually large part of that equation.

That difference is measured by the diesel crack spread, and in 2026, it reached historically high levels. Reuters reported in September that diesel crack spreads reached about $108 per barrel as global diesel supplies tightened. The U.S. Energy Information Administration (EIA) has also estimated U.S. diesel crack spreads above $2 per gallon during parts of the second half of 2026.

What Is a Diesel Crack Spread?

A crack spread measures the difference between the price of crude oil and the price of a refined petroleum product made from it. For diesel, EIA calculates the spread by subtracting the cost of a gallon of crude oil from the wholesale cost of a gallon of diesel. The result serves as an indicator of the value, or margin, associated with refining crude into diesel.

For example, if crude oil costs the equivalent of $2 per gallon and wholesale diesel costs $3 per gallon, the diesel crack spread would be $1 per gallon. Because one barrel contains 42 gallons, that would equal roughly $42 per barrel.

It is important to remember that a crack spread is a proxy for refining margins, not a refinery's actual profit. Refineries also have operating, transportation, labor, energy and other costs that are not captured by the simple calculation.

Why Does the Crack Spread Matter?

The diesel crack spread can tell us something crude prices alone cannot: how tight the market is for the finished product. When diesel supply is plentiful relative to demand, the difference between crude and diesel prices tends to narrow. When diesel becomes scarce, buyers compete for available supply, and diesel prices can rise faster than crude, widening the spread.

That is what makes crack spreads particularly useful for fuel buyers. A falling crude price does not necessarily mean diesel prices will fall by the same amount. If the diesel crack spread widens at the same time, some or all of the decline in crude can be offset by higher refining margins.

In September, EIA specifically pointed to the combination of elevated crude prices and high diesel crack spreads as a major factor behind higher U.S. diesel prices.

How Unusual Are Current Levels?

Recent diesel crack spreads stand out even compared with the tight market experienced in 2022. EIA data show inflation-adjusted U.S. diesel crack spreads generally running around $0.40 to $0.70 per gallon from 2017 through 2021. Spreads rose sharply in 2022 following Russia's invasion of Ukraine and the resulting disruption to global petroleum markets, at times moving above $2 per gallon.

After easing in 2024 and 2025, diesel crack spreads moved sharply higher again in 2026. EIA's September Short-Term Energy Outlook estimated average U.S. diesel crack spreads would exceed $2 per gallon from August through November. Reuters reported that diesel cracks reached approximately $108 per barrel in early September.

Those levels show that today's high diesel prices are not simply a crude oil story. The market is also placing an unusually high value on available diesel supply.

What Is Driving Diesel Cracks Higher?

The biggest factor is a tight global distillate market. EIA reports that reduced refining activity in Russia, China and the Middle East has limited global supplies of distillate fuels, including diesel and jet fuel. At the same time, strong international demand has pulled more U.S. barrels into the export market.

U.S. refiners have responded by running hard. EIA reported refinery utilization reached 97% for the week ending September 11, while U.S. distillate production from January through August averaged 5.1 million barrels per day, the highest for that period since 2019.

Even that production has not been enough to rebuild inventories. As of September 11, U.S. distillate inventories were 13% below their five-year seasonal average. EIA expects inventories to remain below the five-year range through much of 2027.

That combination of constrained global refining capacity, strong exports and low inventories has kept the value of available diesel high relative to crude.

What Fuel Buyers Should Watch

Crack spreads give fuel buyers another way to understand what is happening behind diesel prices.

When crude and diesel move differently, the crack spread can help explain the gap. A widening spread can indicate tightening product supply, while a narrowing spread may signal that diesel availability is improving relative to crude.

Looking ahead, inventory levels, refinery operations, international diesel exports and disruptions to global refining will all be important indicators. EIA currently expects diesel crack spreads to decline during 2027 as international refinery production and trade flows improve, but the agency notes that prolonged disruptions could keep spreads higher than forecast.

For fleets and businesses, the key takeaway is that watching crude oil alone does not provide the full picture. Diesel has its own supply and demand fundamentals, and today's historically high crack spreads are a clear example of how those fundamentals can become a major driver of the price paid for fuel.