Global Diesel Crunch Worsens Ahead of Peak Winter Demand
BofA: Hormuz Needs 10 Times More Ships to Stabilize Oil Markets What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the… As peace in the Persian Gulf remains elusive and Ukrainian drones keep raining on Russian refineries, a global fuel crisis is looming larger by the day as demand is set to increase in the coming months, especially for diesel.
Shortages are already reality in some parts of the world.
In Southeast Asia, Reutersreportedlast week, palm oil farmers are seeing diesel supply shortages and spiking prices.
In the United States, diesel fuel exports hit an all-time high in the first week of August, running at an average daily rate of 1.9 million barrels.
Meanwhile, Russia, the world’s number-two diesel exporter, has banned exports in order to deal with the local supply squeeze caused by Ukrainian drone attacks on refineries.
The situation is quite far from perfect for large fuel importers such as the European Union because it is now facing new competitors such as Brazil and Turkey, which previously took in a lot of Russian diesel fuel.
Still, with that gone, they have to compete with U.S.
barrels as supply from the other big refining hub in the Middle East remains severely disrupted.
In the European Union, as many as 30 refineriesclosedbetween 2009 and 2024, with another 400,000 barrels daily in capacity set for closure in 2025 amid Brussels’ tightening emission reduction rules that have raised costs for refiners substantially—and made the originally trade-focused bloc a lot more vulnerable to global market disruptions.Related: BofA: Hormuz Needs 10 Times More Ships to Stabilize Oil Markets “Europe has a tremendous diesel problem,” Eugene Lindell, head of refined products at consultancy FGE NexantECA,toldBloomberg.
“It will get ugly in the sense that you will probably see extremely high flat prices.” These high prices will spread to everything from consumer goods to services and, according to FGE’s Lindell, translate into pressure on political circles.
“We’re in a diesel supply crunch right now because none of the Persian Gulf refineries can get product out,” Rabobank senior energy strategist Joe DeLaurasaid, as quoted by the Wall Street Journal earlier this month.
“Crude oil is just the input, but diesel is the everything the industrial economy runs on,” he also said.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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