Key facts
- Global diesel supply will remain tight into next year due to insufficient refining capacity.
- Lost supply from Russia and the Middle East is estimated at nearly 4 million barrels per day.
- Diesel prices in the U.S. have reached record highs, exceeding $5.90 per gallon.
- Governments are implementing emergency relief measures such as fuel tax cuts.
- Refinery damage in the Middle East and Russia, along with export bans, are contributing to the shortage.
Global diesel fuel supply is expected to remain constrained through the upcoming winter and into next year, primarily due to a significant deficit in refining capacity. Industry executives cited by Reuters estimate a shortfall of nearly 4 million barrels per day from Russia and the Middle East.
Russell Hardy, CEO of Vitol, highlighted the impact of missing Russian and Middle Eastern supplies, stating that current Middle Eastern fuel exports are only around 1 million barrels daily, leading to substantial inventory draws globally. Mark Senn, senior vice president for global trading at Phillips 66, warned that the tight supply situation, coupled with low diesel stocks heading into winter, could sustain market strength.
Diesel prices have surged worldwide, with U.S. prices breaking records and exceeding $5.90 per gallon. This price escalation is prompting governments to consider or implement emergency relief measures, such as fuel tax cuts, to mitigate the impact on consumers.
The supply crunch is exacerbated by ongoing issues affecting production and exports. Russia is facing challenges with refinery repairs following Ukrainian drone strikes and a domestic fuel squeeze, while Middle Eastern refiners are contending with refinery damage and disruptions related to the Strait of Hormuz. Saudi Aramco's Jizan refinery, with a capacity of 400,000 barrels daily, was recently attacked by Houthi forces, further impacting regional supply.