Belgium may be home to Antwerp, one of Europe’s largest refining and diesel-trading hubs, but that does not give Belgian motorists access to cheaper fuel. Diesel produced in Antwerp is traded at international north-western European prices, which are determined by global supply, refinery availability, transport costs, and geopolitical tensions.

That global market is now flashing warning signals. Goldman Sachs says diesel, rather than crude oil, has become the center of the current energy squeeze. The world may have enough crude, but refinery outages in Russia and the Middle East have reduced the capacity to turn it into diesel, kerosene, and other fuels.

This helps explain why the Belgian maximum diesel price remains unusually high. It falls by 7.8 euro cents to €2.211 per liter, but diesel will still be more expensive than gasoline, a historically uncommon situation.

Belgium, therefore, finds itself in a paradoxical position: it is a major producer and transit country for diesel, yet Belgian drivers remain fully exposed to the global market price.

As long as tensions surrounding Iran and the Strait of Hormuz persist and international refining capacity remains constrained, Goldman Sachs warns that temporary supply shocks could continue to cause sharp price fluctuations.

Diesel exports fell by approximately 35%

According to a recent report by the US investment bank and financial services firm Goldman Sachs, war-related refinery outages in both the Middle East and Russia (due to the export ban and Ukrainian attacks) have caused a collapse in global fuel supply. At the same time, higher production in North and South America and Africa has only offset about one-third of the shortfall.

As a result, global refining throughput was about 6.5 million barrels per day lower than a year earlier, partly due to lower refining rates in China. Specifically for diesel, global exports fell by approximately 35% in July, or 2.6 million barrels per day.

A crisis is looming

Since Europe consumes more diesel than it can produce on its own, it is structurally dependent on imports, and a (price) crisis is therefore looming, especially given its structural diesel deficit.

The price of diesel at the pump has already risen sharply, reaching a record high of €2.289 per liter in March this year. After some price fluctuations, it rose again in late July, partly because, although OPEC+ is increasing its official production quotas, actual production is lagging far behind due to disrupted exports from the Gulf region.

And that, of course, has consequences for diesel car owners and the transportation sector – the transition to e-trucks is proceeding more slowly than it has for passenger cars. Goldman Sachs also expects the diesel market to gradually shrink anyway, while temporary supply shocks could still cause significant price fluctuations.

Structural pressure on demand for diesel

Due in part to the growth of EVs and more efficient energy use, particularly in Europe and China, where the shift toward alternatives is accelerating, the bank anticipates a gradual decline in oil demand, which will consequently put structural pressure on diesel demand as well.

Refineries, which distill diesel from crude oil, can indeed shift more of their production toward diesel when margins are attractive, as they are now. However, they cannot indefinitely shift their production from gasoline to diesel, because the refining process has physical and economic limitations.

On the other hand, an increase in diesel production at US refineries could come at the expense of gasoline production – traditionally a very important market in the US.

Diesel hub Antwerp, but…

Damien Ernst, a professor at the University of Liège (ULiège), also sees little reason for optimism in the short term. “We must expect diesel prices to rise further in the coming weeks,” he says in the newspaper La Dernière Heure. “If the situation in Russia and the Middle East does not improve, prices at the pump will rise again.”

There is no need to worry about shortages at the moment. The ANWB, which monitors fuel supplies at gas stations across Europe, confirms that there are currently no fuel shortages at gas stations in the Netherlands and Belgium.

Like other EU countries, Belgium maintains mandatory oil reserves equivalent to at least 90 days of net imports or 61 days of domestic consumption, in accordance with European regulations.

Furthermore, Antwerp is known as a major European diesel hub. The Antwerp refineries, including those operated by ExxonMobil and TotalEnergies, produce significant volumes of diesel for both Belgian and European markets – a large portion of the diesel passing through the port is destined for other European countries.

However, that does not shield Belgian motorists from higher prices. Diesel produced in Antwerp is not sold at a special Belgian cost price. It is traded according to the international value of diesel in north-western Europe, just as the Belgian maximum pump price follows international diesel quotations, transport and biofuel costs, taxes, and regulated distribution margins.