Situation Report: It Got Worse, Broke the Wrong Record
Key Extract
Diesel refining margins just cleared the Ukraine-shock record at roughly $98 a barrel, distillate stocks slipped further below the five-year average, the SPR fell to 293 million barrels, and the rig count dropped again. High prices are no longer fixing supply.
Everyone's back. Kids in school, inbox full, calendars packed again.
So here's where the market actually stands going into September, because it isn't where you left it in July.
It got worse.
Diesel. The margin to turn a barrel of crude into diesel ran to roughly $98 in the week to August 14 — EIA has ULSD at New York Harbor at $4.332 a gallon against WTI Cushing at $83.99. Before all this, that spread lived between $15 and $25. Its previous high, set in October 2022 at the worst of the Ukraine shock, was about $95.
We just cleared the Ukraine record.
And diesel isn't some niche industrial fuel. It's the input underneath nearly everything you own — trucks, trains, ships, tractors, excavators, backup generators. It never appears on your receipt. It's already inside the price before the thing reaches the shelf.
| Event | Refining margin ($/bbl) |
|---|---|
| Russia invades Ukraine (Oct 2022 peak) | 95 |
| Hormuz closes (week ending Aug 14, 2026) | 98 |
Source: US EIA — ULSD New York Harbor & WTI Cushing spot prices. Monthly averages through July 2026; final point is the weekly reading for the week ending August 14, 2026 (Weekly Petroleum Status Report).
| Year | SPR crude stocks (million barrels) |
|---|---|
| 2021 | 638 |
| 2026 | 293 |
Source: US EIA — SPR crude oil stocks, series WCSSTUS1 (month-end).
Refineries still have nothing left. Two weeks ago in Crude at Street Level, distillate stocks were 12% below the five-year average and refineries were running at 96.5%.
Now it's 13% below, and 97.2%. Both moved the wrong way. Running harder, drawing down anyway.
And the reserve kept going. In my inventories report, I flagged the SPR at 311 million barrels. It's 293.4 now. A year ago it was 403.
Nobody's drilling. Brent spent last week in the mid-90s. The US rig count fell five, to 588.
High prices used to fix this. Rigs go up, barrels follow, price comes back down. That playbook isn't running.
Where that leaves us: the IEA now puts the third-quarter deficit at 1.8 million barrels a day — roughly double what they said a month ago.
I'm not going to hand you a projection. Nobody's crystal ball is polished.
What I'll tell you is we are very comfortable having stress-tested the books and our economics at $65 to $70 oil, well below where it sits today.
Enjoy the last of the summer. Hit reply if you have more questions or constructively disagree — I read them all.
Your Oil and Gas team, Mike Qu, on behalf of CrownForge Energy.