Oil is up 60%. But this little-known margin has surged fivefold.

Oil prices aren’t the only reason petrol and diesel prices are rising. Diesel prices have nearly doubled since the start of the Iran war, yet oil prices are up only about 60%. Why is this?

Crude oil is only about half the story of what you pay for fuel in 2026.

Brent crude trades near $104 a barrel, well below its 2008 record of roughly $147. Yet diesel prices are at all-time highs in many countries. The gap comes from what happens after oil leaves the ground: it must be shipped and refined.

Right now, refining and shipping are where the real shortage sits.

The hidden cost driving fuel prices higher

Every litre of fuel has three wholesale building blocks before taxes are added.

1. Crude oil. A barrel holds 159 litres. At about $100 a barrel, the raw material costs roughly 63 US cents a litre. This part is the same whether the litre ends up as petrol, diesel or jet fuel.

2. Transport. Crude travels by tanker to a refinery, and the finished fuel travels again to the buyer. In normal times this adds only a few cents a litre. It rises when ships must take longer routes or pay higher war-risk insurance.

3. The crack spread. Refineries “crack” crude into usable fuels. The crack spread is the difference between the price of a fuel and the price of the crude it came from. Think of it as the refiner’s gross margin, and as a gauge of how scarce each fuel is. A year ago it was about $20 a barrel for diesel. Today it is five times that.

Two things stand out. Crude costs are identical across all three fuels, so the entire price difference comes from refining. And for diesel, the refining margin now costs more than the oil itself. Pump prices then add taxes, levies and retail margins, which differ by country.

Why diesel is taking the biggest hit

The crisis began in early March 2026, when war between Iran and a US-Israeli coalition closed the Strait of Hormuz. More than 20% of the world’s traded oil passes through that channel. Brent peaked at $118.35 on 31 March. A ceasefire followed on 8 April and Brent fell to about $72 by 1 July, but tanker traffic never fully recovered. Renewed attacks on Gulf infrastructure pushed Brent back to $103.86 on 1 October, up 57% in a year (timeline).

The damage was not spread evenly. The refineries knocked offline leaned toward diesel and jet fuel rather than petrol.

Diesel has been hit hardest. Roughly 3-million of the world’s 30 million barrels-a-day diesel supply has been lost, about 10%. Gulf refineries are damaged, Ukrainian drones have struck Russian plants, and several countries have restricted exports. The diesel crack spread closed at a record $107.72 a barrel on 10 September. US diesel stocks were at their lowest level in August since 1951, and the US pump price hit a record $6.05 a gallon. American refiners are already running flat out, so high prices cannot quickly bring more supply online.

Jet fuel is a close second. Jet fuel and diesel come from the same slice of the barrel, called middle distillates, so a diesel shortage becomes a jet shortage. The global average jet price reached $194.65 a barrel on 18 September, about double its level at the end of 2024. Fuel is usually an airline’s highest or second-largest cost, so fares and schedules feel it fast.

Petrol has been hit least. Petrol prices have risen mainly because crude has. Its refining margin is high, at about $50 a barrel, but only half of diesel’s. US petrol averaged $4.29 a gallon on 11 September, painful but short of a record.

South Africa imports much of its fuel, so it feels all of this directly.

The shipping shock making everything worse

Getting fuel across the ocean is normally a cheap, quiet background detail. Not anymore. The ships that move our energy are divided into two types: “dirty” tankers that carry raw crude oil, and “clean” tankers that transport refined products like diesel and jet fuel. Both are currently seeing their costs absolutely explode.

In a normal year, shipping adds barely a couple of dollars to a barrel of oil. But in late 2026, severe conflict and drone attacks in the Middle East have turned key waterways, like the Strait of Hormuz, into danger zones. To avoid getting hit, ships are either paying massive war-risk insurance premiums or taking huge, slow detours around entire continents. Because of this danger and extra travel time, ships are in severe shortage.

Desperate buyers are now paying historic record rates just to rent a vessel. In January, shipping added about $1.73 to a barrel of crude; now, it can add over $33. For clean tankers carrying finished diesel and jet fuel, the delays are even more painful. Every extra day a clean tanker spends rerouting at sea adds a logistical fee that gets tacked straight onto the final price you pay at the pump.

Why higher prices won’t stop the diesel shortage

Economists call demand “inelastic” when people keep buying almost the same amount even as the price climbs. Of the three fuels, diesel is the most inelastic, for four reasons.

1. Diesel is the fuel of work, not leisure. It powers the trucks, trains, ships, tractors, mining equipment and construction machinery that move and make almost everything. A haulier with a contract to deliver food cannot leave the truck parked because fuel is dear.

2. There is no quick substitute. A commuter can carpool, work from home or buy a smaller car. Nobody can swap a combine harvester or a 30-tonne truck for an electric one mid-season. In South Africa, diesel also runs backup generators.

3. The cost gets passed on. Businesses add fuel surcharges and customers pay them. That keeps diesel selling, and it is why a diesel spike shows up later in food and goods prices.

4. Farming and heating run on a calendar. Crops must be harvested when they are ripe, and northern homes that burn heating oil, a close cousin of diesel, need it when winter comes.

Compare the other two. Jet fuel demand is the most flexible: A holiday can be cancelled, and airlines cut unprofitable routes when fuel soars.

Petrol sits in the middle, because households can trim discretionary driving.

Supply is rigid too. A refinery cannot simply choose to make more diesel, because each barrel of crude yields a fairly fixed mix of products.

Stubborn demand meeting stubborn supply is why a 10% shortfall has produced a fivefold jump in the diesel margin.

What investors need to watch now

The key takeaway?

Watch the crack spread, not only the oil price. A fall in Brent will bring limited relief at the pump while refineries stay damaged and diesel stocks stay low. The US Energy Information Administration expects diesel inventories to remain below their five-year low through most of 2027. Until refining capacity recovers, diesel will continue to drive transport and food costs.

Could this fuel crisis be an opportunity for Sasol?

The biggest mistake investors can make during an energy crisis is to focus exclusively on the crude oil price. The real pressure is increasingly emerging further along the supply chain, where damaged refineries, shipping disruptions and persistent diesel shortages are driving fuel prices significantly higher.

And even if geopolitical tensions ease, restoring refining capacity and rebuilding depleted inventories will take time.

For investors, that raises an interesting question: Which companies could benefit from these supply constraints?

One South African company I believe deserves a closer look is Sasol (JSE: SOL).

Unlike traditional oil producers, Sasol has significant fuel production capabilities through its Secunda operations, where it converts coal into synthetic liquid fuels, including diesel and petrol.

This gives Sasol an interesting position in the current market. While much of the world is struggling with refinery disruptions and constrained supplies of refined fuels, Sasol has an established domestic production base.

If diesel prices and refining margins remain elevated, Sasol could benefit from stronger fuel realisations, although the extent of that benefit will depend on its production costs, operating performance and the prices it actually receives.

Of course, Sasol isn’t a direct investment in the diesel shortage. Its share price is also influenced by oil prices, the rand, chemicals margins and operational performance.

Nevertheless, I believe the current disruption makes Sasol an investment opportunity worth investigating.

The global energy crisis is creating challenges for consumers and businesses, but it could also create opportunities for companies positioned to benefit from sustained pressure on fuel supplies.