A global diesel shortage will run through the winter as lost Russian and Middle Eastern refining capacity fails to return, industry executives told Reuters. U.S. diesel prices have already broken records, and traders warn stockpiles are close to empty with no immediate relief in sight.
Diesel prices in the United States broke records this month, topping $5.90 per gallon, as a global supply crunch squeezes refiners and drivers alike. Diesel and other fuel prices are climbing worldwide, prompting some governments to roll out emergency measures such as fuel tax cuts.
Missing barrels drain global stockpiles
Nearly 2 million barrels a day are missing from the Middle East and 2 million barrels a day are missing from Russia, Vitol chief executive Russell Hardy said at the Asia-Pacific Petroleum Conference. Middle East fuel exports are now running at just 1 million barrels a day, Hardy said, which has prompted inventory draws with no immediate hope of replenishment. According to Hardy: "we're pretty much at the bottom of our stockpiles".
Refinery damage keeps supply offline
Russia has banned diesel exports while it repairs refineries damaged by Ukrainian drone strikes and works through a domestic fuel squeeze. Middle Eastern refiners, meanwhile, cannot move their fuel out through the Strait of Hormuz and are dealing with their own refinery damage. Attacks on infrastructure continue: Saudi Aramco's Jizan refinery, which has a capacity of 400,000 barrels a day, was attacked again this week by Yemeni Houthi forces.
Winter deficit could extend the squeeze
For traders following crude oil markets, the diesel shortage adds another layer of pressure on refined product prices heading into winter.
Source: Commodities Analysis & Opinion (Investing.com)
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