OECD Unlikely to Face Diesel Shortage Due to Market, Government Responses, Goldman Says — OPIS

Commercial diesel stocks held by the Organization for Economic Co-operation and Development developed economies are unlikely to fall below a key supply threshold because of expected additional strategic reserve releases, rising diesel share of refinery production and weakened demand in response to a price spike, Goldman Sachs said.

The U.S. investment bank said Monday that current high global diesel margins are signaling scarcity risks, even if the OECD commercial diesel inventory coverage was 27 days of demand, exceeding the 25-day tipping point below which inventory draws have historically led to price spikes.

The lower-than-usual coverage reflects the recent rapid pace of OECD commercial diesel stock depletion estimated at 800,000 b/d amid an uncertain length of disruption, Goldman said. The bank said it has estimated when OECD commercial diesel inventories would reach a critical shortage level -- at 20 days of coverage -- under three scenarios considering possible responses including additional Strategic Petroleum Reserve diesel releases, increasing refinery diesel yield and diesel demand destruction.

Under an unlikely scenario of a persistent Strait of Hormuz closure without any of the three responses, Goldman expects OECD diesel stocks to drop to the 20 days of demand threshold in August.

In a persistent closure scenario with 600,000 b/d of SPR diesel releases, OECD diesel stocks would likely reach that 20-day threshold in October, the bank said.

For any combination of two of the three responses -- i.e. a one percentage-point global diesel yield gain, 600,000 b/d of SPR diesel releases and 3% additional demand destruction -- Goldman estimates diesel stocks would stay above 20 days of demand even if the Strait remains closed through the end of this year.

Goldman expects diesel to be more vulnerable than gasoline under the current supply shock. This is because the sharp drop in Persian Gulf exports involves medium and heavy crude oil, which tends to yield more heavy products such as diesel, fuel oil and jet fuel than lighter WTI or Brent crude, it said.

In addition, prices would have to rise substantially higher for diesel than for gasoline to generate the same amount of demand reduction. This is because the price elasticity of demand is lower for diesel, which is mostly used for trucking but also in more recession-proof industries like mining, construction and agriculture, Goldman said.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

-- Reporting by Frank Tang, ftang@opisnet.com; Editing by Allegra Fradkin, afradkin@opisnet.com

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May 11, 2026 18:22 ET (22:22 GMT)