Crude oil is finding its way back to the market through covert shipments and alternate shipping routes, but the shortfall in downstream refining capacity cannot be bridged by logistical maneuvers alone. This structural imbalance has prompted Goldman Sachs to dramatically raise its 2027 diesel refining margin forecasts, cementing a "higher for longer" premium outlook for the fuel.
In its August 29 report, the investment bank lifted its projection for US diesel refining margins over Brent crude in 2027 from $27 per barrel in its February estimate to $63 per barrel. European margins were similarly adjusted upward, from $19 to $49 per barrel, with both figures more than doubling from previous forecasts.
The revision comes against a backdrop of global refined product exports falling by approximately 6 million barrels per day, or about 25% year-on-year. The Persian Gulf accounts for 3.2 million barrels per day of that decline, while Russia contributes another 1.1 million barrels per day, together representing roughly three-quarters of the global shortfall.
While Persian Gulf crude exports have rebounded to between 70% and 80% of pre-conflict levels, the report notes refined product exports have only recovered to approximately 40% of those levels. Goldman Sachs projects that global refinery utilization rates will not normalize until the second half of 2027, ensuring that diesel's structural shortage continues to influence pricing dynamics for an extended period.
Crude Has Returned, But Refined Products Lag Behind
Although Persian Gulf crude exports have regained 70% to 80% of pre-war volumes, refined product exports remain stalled at roughly 40%. Goldman estimates actual crude exports from the region at approximately 15 to 16 million barrels per day, which is 5 to 6 million barrels per day higher than the March trough and notably above real-time tanker tracking figures.
This discrepancy reflects a growing number of vessels switching off their AIS transponders and increased ship-to-ship transfers. Iran and Oman are advancing plans for a temporary shipping corridor through the Strait of Hormuz, while Gulf producers are expanding alternative routes that bypass the strait altogether.
The divergence between crude and refined products is stark: global crude exports are down only 10% year-on-year, while diesel, jet fuel, and fuel oil exports have fallen 22%, 20%, and 32% respectively. Pricing tells a similar story, with diesel margins up 225% year-on-year and jet fuel up 234%, compared to just 34% for crude. Goldman believes the continued growth of "dark fleet" supply and alternative routes under development may cap the upside for crude prices, even if Middle East supply disruptions persist.
Total global refined product exports have contracted by roughly 6 million barrels per day year-on-year, with the Persian Gulf and Russia accounting for about three-quarters of the decline. Russian refineries have been hit by attacks triggering restrictions on gasoline and diesel exports, Middle Eastern facilities remain damaged, and shipping through the Strait of Hormuz and the Red Sea continues to face disruptions.
Goldman's key insight is that crude can be rerouted, but refineries cannot be relocated, marking the fundamental difference between this supply shock and previous crude-only disruptions.
Refining Bottlenecks Lock In Long-Term Margin Gains
Supply-side repair will take considerable time. Global refinery shutdowns are running about 60% above seasonal norms, with Goldman estimating global refining throughput is down nearly 7 million barrels per day year-on-year.
Spare capacity remains scarce: US refineries are operating close to full utilization, Asian facilities face constraints on crude supply, and new capacity coming online is insufficient to offset persistent outages. Six months of supply shortfalls are now beginning to draw down inventories, with US diesel and gasoline stocks down 9% and 7% respectively year-on-year.
Since February, diesel has contributed more than 40% of the $40 per barrel increase in global refined product prices, prompting Goldman's significant forecast revision. The bank expects global refinery utilization rates to only return to seasonal normality in the second half of 2027, with new capacity insufficient to close the gap.
Additionally, the report highlights that term freight contracts for voyages from the Persian Gulf to China for May 2027 delivery have risen roughly fivefold within a single month, indicating that shipping markets are not pricing in a rapid return to normal conditions.
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