There was plenty of excitement in financial markets on Monday when the diesel crack spread for US refiners topped $100 a barrel for the first time.

That sentence probably needs some explaining, and also a few words on why it actually matters. The “crack spread” is the difference between what a refiner of crude oil pays for a barrel of oil and how much they get for a barrel of the products they make from that oil.

A rule of thumb that is used in the industry is the 3:2:1 crack, where three barrels of oil can be used to make two barrels of petrol and one barrel of diesel.

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Before the outbreak of the conflict in the Gulf, that 3:2:1 crack was generally between $20 and $30 a barrel. This week in the US it stands at around $70. The driver of that increase has been diesel margins. When the spread between the price of a barrel of oil and the price of a barrel of diesel was calculated this week, it had moved above $100.

This comes at a time when the price of oil is well below its peaks seen in April and May, with a barrel of West Texas Intermediate (the US benchmark) this week trading at close to $85 (€73.40). That record-high diesel crack spread goes straight to refiner profits.

The reason refiners can command such high prices for diesel right now is because the world is very short of the product.

The on-going stand off around the Strait of Hormuz has reduced the amount of crude oil, but also the amount of refined product, which is being transported from the region.

The targeting of Russian refineries by Ukraine over recent months has also done a lot of reduce global supplies of the fuel.

That conflict has also seen both sides target shipping in the Black Sea meaning that even where Russia can refine fuels, it would struggle to ship them out, if it hadn’t already banned international diesel sales.

The problem Russia faces was highlighted in recent weeks by reports that the country has started buying fuel from India to make up for shortages.

In Europe, wholesale prices for diesel are almost 50% higher than where they were at the end of June, with the continent becoming increasingly reliant on imports from the US.