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Middle East and Europe wars tighten global gasoline, diesel supply
Experts warn there is “zero slack” in refining, and demand for diesel is outstripping supply as more refinery outages would likely push prices higher.
Global fuel markets are growing more constrained as wars in the Middle East and Europe roil oil and refined product flows, leaving refiners with little room to absorb disruptions, LiveMint Markets, citing Bloomberg, reported. According to Energy Aspects co-founder Amrita Sen, the system is running at capacity with “zero slack,” because there is not enough refining capacity and the only balance comes from supply and demand.
The outlet said refined products have seen larger jolts than crude as supply shocks have fed through to gasoline, diesel, and jet fuel markets. In the United States, gas prices in many states are back above $4 a gallon, with diesel above $5, while in Russia people are reportedly waiting in line for gasoline for hours.
LiveMint Markets also pointed to policy and operational steps meant to keep fuel moving, including the French government suspending weekend driving restrictions for fuel tankers to preserve diesel and gasoline deliveries. It added that the outlook is worsening as the Iran conflict expands, Ukraine continues to affect Russian refining, and fuelmakers run plants flat out, increasing outage risk.
The story said diesel demand is especially strained, raising the possibility of a tipping point where either the conflict ends or fuel prices keep spiking, leading to demand destruction as buyers pull back. It also noted that for fuel producers, record profits are drawing production incentives, with US refineries turning more oil into fuel than they have at this time of year since 2018, even as US refining capacity has shrunk by almost 600,000 barrels a day over the same period.
Latest closeWTI crude $90.47 ▼1.9%|Gasoline (RBOB) $3.272 ▼6.4%