US Renewable Diesel Prices Are Surging, Questioning RIN Supply

The US renewable diesel market is getting a powerful lift from an increasingly tight diesel market. But stronger prices do not necessarily mean more renewable fuel will stay in the United States.

That distinction is becoming increasingly important as renewable diesel producers weigh domestic demand against attractive export opportunities, sustainable aviation fuel (SAF) production, and shifting incentive structures.

At the center of the market right now is a simple question:

Will enough biomass-based diesel remain in the domestic market to generate the RINs needed to meet US mandates?

Tight Diesel Supplies Are Supporting Renewable Diesel

The ongoing US-Iran standoff continues to weigh on global crude oil and refined-product supply expectations. Without a lasting resolution, crude and diesel prices have continued to climb.

That is providing substantial support to biomass-based diesel prices, which remain near record highs. And the timing is significant.

According to a Prima CarbonZero analyst report, US renewable diesel production has already experienced downtime in August. This is reflected in relatively subdued feedstock buying and grease and soybean oil prices that remain below their recent peaks. At the same time, conventional diesel demand is beginning to strengthen ahead of the September harvest.

The overall result is a tighter diesel market. Ultra-low sulfur diesel inventories entered August 13.6% below the five-year average. Meanwhile, concerns surrounding refinery output in both the United States and international markets have helped push diesel crack spreads to record highs.

Unless the situation surrounding the Strait of Hormuz changes materially, those conditions could continue supporting diesel prices into the fourth quarter. And that support is flowing directly into renewable diesel economics.

Heating Oil Has Become a Bigger Part of the Revenue Story

One of the most important changes in renewable diesel economics has occurred within the producer revenue stack.

Since early July, heating oil has become the largest component of renewable diesel revenue. Earlier in the year, D4 RIN prices played the more prominent role as optimism grew that the United States and Iran might reach an agreement.

That optimism faded as the Strait of Hormuz remained constrained.

As diesel prices strengthened, heating oil values increased faster than renewable diesel feedstock costs. That has reduced some of the pressure on D4 RIN prices to climb high enough to bring more marginal renewable diesel and biodiesel production online.

In other words, high diesel prices are currently doing some of the economic work that higher RIN prices might otherwise need to do.

That helps maintain strong production margins across the US biomass-based diesel sector. But it does not eliminate the market's underlying supply question.

Strong Margins Do Not Guarantee Domestic RIN Supply

High diesel prices are creating the margin environment needed to support strong utilization across US renewable diesel and biodiesel plants.

Rising Low Carbon Fuel Standard prices are adding another layer of support. For some producers, LCFS (Low Carbon Fuel Standard) value is now providing a stronger incentive than the 45Z Clean Fuel Production Credit to maximize sales into the West Coast market.

Transportation economics are also becoming more favorable. The latest 90-day extension of the Jones Act waiver has improved the economics of moving fuel by sea from the Gulf Coast to other US markets.

The Jones Act generally requires cargo transported between US ports to be carried on US-built, US-owned vessels qualified for coastwise trade. The temporary waiver allows covered cargo to move on foreign-flagged vessels. This expands available shipping capacity and potentially reduces transportation constraints.

For renewable diesel producers, that could make it more attractive to move Gulf Coast barrels to higher-value domestic markets, including the West Coast.

Taken together, these factors should encourage production. Yet production volume alone does not determine how many RINs ultimately reach the US market.

The bigger question is where those barrels go.

Exports Are Competing With Domestic Compliance Demand

Some US renewable diesel production capacity is expected to remain focused on export markets, where producers may be able to capture stronger margins.

That opportunity is partly supported by feedstock economics.

Renewable diesel produced for export can potentially benefit from feedstocks priced well below supplies qualifying under US-Mexico-Canada Agreement-related incentive structures. When those economics are sufficiently attractive, exporting finished product can compete directly with selling fuel domestically and generating RINs.

Recent declines in demand for imported feedstocks thought to be destined for export-oriented renewable diesel production suggest that activity may have slowed. But the underlying incentive remains.

And that creates an important tension for the US market. The country may have substantial renewable diesel production capacity, but not all of it necessarily contributes to domestic RIN generation.

SAF Adds Another Layer of Competition

Sustainable aviation fuel could further complicate that equation.

Renewable diesel producers increasingly have multiple pathways for monetizing their production capacity. Depending on plant configuration and market economics, some capacity can be redirected toward SAF.

That opens additional revenue opportunities through both physical SAF sales and SAF-related credits. For producers, that flexibility can be valuable.

For the RIN market, however, it introduces another potential source of supply competition.

Every gallon of production capacity directed toward an alternative market is capacity that may not be producing renewable diesel for domestic road-fuel consumption and associated RIN generation.

As SAF markets continue to develop, the relationship between renewable diesel capacity, SAF production, exports, and domestic compliance supply will become increasingly important to monitor.

The Market Is More Than Just US Production Capacity

The US renewable diesel industry has the economics needed to run hard:

• Diesel prices are elevated

• Margins remain strong

• LCFS values are improving

• Domestic biomass-based diesel demand remains supported by federal mandates

But those conditions do not automatically translate into maximum domestic supply.

Producers now operate within a much broader market in which the same production capacity can potentially serve West Coast compliance markets, international buyers, SAF demand, or conventional domestic renewable diesel consumption.

That means the key question for the remainder of the year may not simply be how much renewable diesel the United States can produce. It may be how much of that production actually stays in the US market and generates the RINs needed to satisfy mandated demand.

With refinery constraints, geopolitical uncertainty, export economics, SAF growth, and changing incentive values all competing for influence, that balance could prove critical heading into the fourth quarter.

Biofuels Outlook Webinar: Get a Comprehensive Market Overview

Renewable diesel is only one part of a fast-moving biofuels market shaped by shifting feedstock economics, policy, trade flows, and geopolitical risk.

To get a better handle on the market, please join ResourceWise on September 3 at 10:00 AM ET for our Biofuels Market Outlook: Q4 2026 webinar.

Matthew Stone will break down the key developments influencing pricing, feedstocks, policy, SAF, marine biofuels, and global market dynamics heading into the final quarter of the year.

Register now to get a clearer view of the signals shaping Q4 2026.