Key findings from Goldman's analysis
Goldman Sachs calculates that a one percentage point rise in the U.S. diesel yield corresponds with a 0.8 percentage point drop in finished motor gasoline yield, reflecting refiners' tendency to reallocate output toward diesel when diesel margins outcompete gasoline margins. This mechanical trade-off in refinery product slates underpins the firm's assessment of fuel balances under a potential extended closure of the Strait of Hormuz.
The bank's scenario work indicates that OECD commercial diesel stocks would likely remain above a defined critical level through the end of 2026 even in the event of a sustained closure of the Strait, provided higher diesel prices prompt at least two of the following three responses:
- a further 1 percentage point increase in diesel yield;
- additional Strategic Petroleum Reserve releases of 0.6 million barrels per day;
- or demand destruction for diesel of roughly 3%.
Why gasoline could be more exposed
Despite unusually high diesel and jet fuel yields, U.S. gasoline yield has remained resilient, a pattern Goldman attributes likely to destocking of blending component inputs rather than stronger refining economics for gasoline itself. The firm also quantifies a linkage between margins and utilization: a $10 rise in the 3-2-1 refining margin is estimated to raise global refining utilization by 1.3 percentage points. Goldman cautions, however, that margins may now need to increase by more than in the past to achieve the same upward pressure on utilization above seasonal norms.
Inventory trajectories under different persistent-closure permutations
In an unlikely but illustrative outcome where the Strait remains closed and refiners do not materially raise diesel's share of output, or where there are no meaningful changes in refinery utilization, demand destruction, or diesel SPR releases, OECD commercial stocks of diesel and gasoline would both be stressed. Goldman estimates that under such a persistent-closure scenario, inventories would likely hit an estimated critical threshold equivalent to 20 days of demand covered in August for diesel and in October for gasoline.
Introducing a one percentage point increase in diesel yield together with demand destruction alters the picture: OECD commercial diesel inventories would likely stay above the 20-day threshold through the end of 2026, but gasoline inventories would still be expected to reach that threshold in December.
What would be required to keep both fuels above the threshold
To preserve OECD commercial stock coverage for both diesel and gasoline above the estimated 20-day critical level through end-2026 under a persistent closure, Goldman says a combination of measures is likely necessary. Specifically, diesel demand would need to fall by about 3% and gasoline demand by about 4%, outcomes that the firm notes would very likely imply higher prices for both products. Additionally, the scenario requires either a further 1 percentage point rise in the global refining utilization rate or SPR diesel releases averaging 0.6 million barrels per day.
This analysis presents modeled outcomes and threshold estimates based on the assumptions described above and the responses indicated.