Exploding diesel crack spread driven by refinery supply constraints will feed persistent goods inflation

Global crude exports are down roughly 14% while diesel exports have fallen approximately twice that. The diesel crack spread — the margin between crude input and refined product — has exploded. This supply gap cannot be resolved by monetary policy; it requires physical refinery capacity. Key refining regions face simultaneous structural constraints — Gulf Coast shutdowns for environmental and Jones Act reasons, Russian refineries damaged by missiles, Middle Eastern refineries also under attack — compounded by seasonal maintenance and hurricane season. Since diesel underpins virtually all physical goods transport in the US economy, sustained high crack spreads feed directly into goods inflation that central banks cannot address by adjusting interest rates.