Russian diesel has moved from being the main bullish factor in global middle-distillate markets in 2025 to an overwhelmingly bearish force by early 2026, reversing a year-long surge in refining margins. The European diesel crack spread rose from $16.7/bbl in early January 2025 to $34.17/bbl in November as Russian supply – already structurally weakened since the start of the war – slid into acute shortage. That squeeze has now eased with the diesel crack spread averaging $21.7/bbl in January 2026. Refinery repairs, recovering runs and a rebound in diesel exports – which returned to around 900,000 b/d in December – have pushed Russian diesel back into the market, softening cracks before the onset of EU sanctions on January 21 briefly firmed them again. The renewed Russian diesel flows have reshaped trade routes again, triggering a sharp revival of Russian diesel shipments to Brazil despite earlier pullbacks, underscoring both Russia’s growing resilience to refinery attacks and the limits of sanctions pressure when discounted fuel meets persistent demand.
The rise in diesel crack spreads through most of 2025 was driven in large part by a sharp contraction in Russian exports, which fell to a five-year low of 586,000 b/d in September. The tightening was shock-driven rather than gradual. It began in January with a Ukrainian drone strike on the Ryazan refinery – a 13.1 Mtpa plant accounting for about 5% of national refining capacity – and persisted through the year as repeated attacks disrupted refining. Pressure intensified in autumn, culminating in a record 14 drone strikes in November alone, including a hit on the Afipsky refinery near Krasnodar, a 9.1 Mtpa facility. In total, media reports indicate more than 20 refineries were affected in 2025, with some estimates suggesting around 20% of national capacity was offline at various points due to strikes or maintenance. Refinery runs reportedly fell to about 5 million b/d in September, prompting Russia to impose partial restrictions on diesel shipments and introduce a temporary export ban for non-producing companies in September 2025, later extended through March 2026.
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That tightness, however, began to unwind in December. As a consequence, diesel cracks went down steadily, reaching $19.89/bbl by mid-January, as Russian refinery runs recovered faster than expected. Russia’s diesel output averaged 1.8 million b/d in the first half of January 2026 – the highest level since January 2025 – with ultra-low sulfur diesel (ULSD) accounting for around 1.75 million b/d. Overall refinery runs rebounded from 5 million b/d in September to about 5.5 million b/d in December. The recovery came despite widespread expectations that repairs would be prolonged, particularly given restrictions on the sale of Western equipment and materials needed to restore damaged refining units. Instead, Russian operators appeared to be capable of restoring capacity more quickly than anticipated.
The rebound was visible not only in output but also in export flows. In December, the Tuapse refinery – a heavily export-oriented plant – was seriously damaged by a drone strike, yet loadings of ULSD resumed by mid-January. Kpler data show two cargoes were loaded on January 10 and January 14, heading to Turkey and Libya respectively. At the Primorsk oil terminal alone, the January loading program is set to reach 2.2 million tonnes, a 27% month-on-month increase, with volumes rising from 440,000 b/d in December to 528,000 b/d in January. This marks the highest loading level ever recorded at Primorsk, underscoring the growing importance of its Baltic Sea location, as exporters redirect additional volumes away from the Black Sea, where Ukrainian attacks on Russian tankers have become increasingly frequent. In total, Russian diesel exports went from roughly 590,000 b/d in September to around 900,000 b/d in December – a full year-on-year recovery.
Rising output has also translated into growing Russian diesel stocks: a reported 3-year high of 27.6 million barrels. In this context, Russian energy authorities are actively discussing the removal of the ban on diesel exports by non-producing companies, arguing that domestic supply is now sufficient to cover internal demand even during winter.
While the recovery initially weighed on margins, the diesel crack spread has since firmed again, climbing to $25.43/bbl by January 21 amid colder temperatures and seasonal demand. That rebound is likely to encourage further Russian exports, particularly to price-sensitive destinations where supply alternatives remain limited.
Brazil is a clear example. Chronic shortages in domestic refining capacity leave the country heavily dependent on imported diesel, making discounted Russian barrels economically attractive. Yet Brazilian purchases were sharply curtailed in the second half of 2025 as Russian supply shrank and political risk rose. Imports from Russia fell from 247,000 b/d in March – when US President Donald Trump first signalled possible new sanctions on Russian oil if a peace deal with Ukraine failed – to just 49,000 b/d in November, when those sanctions were put into effect. US diesel emerged as the primary substitute for the lost Russian volumes in the autumn of 2025. Those curbs, however, proved temporary. In December, Brazilian imports of Russian diesel rebounded to 181,000 b/d, suggesting that domestic supply gaps, favourable pricing and growing fatigue with sustained US pressure ultimately outweighed concerns about friction with Washington. Moreover, Indian diesel exports to Brazil since November 2025 have been sourced almost exclusively from Nayara Energy’s Vadinar refinery – a sanctioned facility partly owned by Rosneft and running exclusively on Russian crude.
Three conclusions stand out. First, Russia has shown far greater resilience to drone attacks on its refining infrastructure, with operators increasingly able to repair damage quickly. Considering that Ukraine’s long-haul strikes on refineries have tapered off, refinery utilisation is likely to remain stable, while softer post-winter diesel demand combined with steady Russian supply points to narrower diesel cracks in spring 2026. Second, as refining capacity continues to recover, Russia’s need to export crude should diminish, raising the likelihood of lower crude exports ahead. Third, Western pressure to curb purchases of Russian oil products remains structurally weak: as long as Russian diesel is discounted and demand stays firm, economic incentives continue to outweigh political risk – a reality that has repeatedly reasserted itself across global fuel markets.
By Natalia Katona for Oilprice.com
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