Global diesel prices are projected to rise sharply over the coming year due to disruptions caused by conflicts involving Iran and Ukraine, industry analysts warn.

Goldman Sachs has significantly increased its forecast for the diesel margin—the gap between diesel prices and Brent crude oil—reflecting tight supplies and escalating geopolitical tensions. The investment bank now predicts that by the end of 2024, diesel will cost approximately $63 more than a barrel of Brent crude in the United States and $49 more in Europe, nearly double its earlier forecast issued in February before recent hostilities intensified.

Key factors driving the surge include Iran’s military actions and shipping restrictions impacting crude oil flows, as well as ongoing attacks on refineries linked to the conflict in Ukraine. Iran has imposed a de facto blockade on the Strait of Hormuz, a critical transit route that previously handled about 20% of global seaborne oil and gas exports. In addition, Iranian forces have targeted oil processing facilities across the Gulf region, including Kuwait’s Mina Abdullah and Mina al-Ahmadi refineries and Saudi Arabia’s Abqaiq complex.

Meanwhile, Ukrainian military strikes have focused heavily on Russian refining infrastructure. In August alone, Kyiv’s forces launched at least 21 attacks on Russian refineries—the highest monthly total since the conflict began. These assaults have severely disrupted output from Russia, which supplies roughly 10% of the world’s diesel. Russian President Vladimir Putin last week extended a diesel export ban through September to preserve domestic inventories amid mounting supply challenges.

Compounding these pressures, the United Kingdom faces heightened vulnerability due to a sharp reduction in domestic refining capacity over the past two decades. The number of active UK refineries has fallen from nine in 2000 to four today, driven largely by competition with importers facing lower environmental compliance costs. The recent closures of Scotland’s Grangemouth refinery in April 2025 and the Lindsey refinery in Lincolnshire last August have further constrained local supply options. As a result, British motorists have already seen a 4.1 pence per litre rise in diesel pump prices since February, bringing the cost to 183.5 pence per litre.

The ripple effects also extend beyond consumers, impacting manufacturers and agricultural sectors reliant on red diesel for machinery and equipment. The average wholesale price of refined oil products in Iran doubled during the first two months of the year, settling near $130 per barrel as of June—an increase of almost 50% since the onset of the conflict.

Goldman Sachs cautioned that diesel prices could climb even higher if refinery disruptions and elevated shipping costs persist. Their updated forecast reflects a 25% year-on-year decline in global exports of refined oil products, alongside a 60% increase in refinery outages compared to typical levels. These developments underscore the growing fragility of the global diesel supply chain amid ongoing geopolitical instability.