Goldman Sachs expects diesel prices to remain high in 2027, as refinery capacity is limited while inventories need to be rebuilt. Nikhil Bhandari, one of the heads of Goldman’s commodities research in Asia-Pacific, said this on CNBC’s ”Squawk Box Asia”.
The bank expects refinery margins for diesel and jet fuel, known as crack spreads, to average more than 40 dollars per barrel in 2027. That is more than double normal levels of around 20 dollars. At the same time, Brent crude is expected to stabilize at around 80 dollars per barrel.
A crack spread is, simply put, the refinery’s gross margin on converting crude oil into finished oil products such as diesel or jet fuel.
Goldman estimates that refinery capacity outside China will decline by around 300,000 barrels per day in 2026. If demand picks up next year, the global refining system may need to operate at its highest utilization rate in two decades, it says.
