Commodities
Home›Commodities›Energy›Global diesel supply crunch is set to last through win…
Global diesel supply crunch is set to last through winter
Russia and Middle East supply shortfalls, plus limited refining capacity, are keeping diesel stocks in deficit as U.S. diesel prices have recently topped $5.90 a gallon.
Global diesel fuel supply is expected to remain tight into next year because refining capacity cannot quickly replace product lost from Middle Eastern and Russian facilities, Reuters reported, citing refining and commodity trading industry executives.
Vitol chief executive Russell Hardy said the diesel shortage reflects missing supply of about 2 million barrels per day from Russia and nearly 2 million barrels per day from the Middle East. Phillips 66’s Mark Senn added that with winter approaching and diesel stocks already in deficit, price strength could persist in diesel markets.
Reuters noted that U.S. diesel prices have recently broken records, topping $5.90 per gallon this month. Diesel and other fuel prices are rising globally as the squeeze reaches end consumers, prompting some governments to implement emergency relief measures such as fuel tax cuts.
Industry executives said the lost supply is not returning soon. Hardy said fuel exports out of the Middle East are running at about 1 million barrels daily, contributing to inventory draws with no immediate prospect of replenishment, and that stockpiles are near the bottom.