Key facts
- US diesel prices hit a record $6.50 per gallon last week.
- Global diesel prices are at record highs due to conflicts in Iran and Ukraine.
- Concerns are shifting from rising prices to potential physical fuel shortages.
- Russia extended its diesel export ban until the end of October.
- US refiners are operating at maximum capacity.
- US officials oppose a ban on diesel exports, warning it would backfire.
US diesel prices have reached a record $6.50 per gallon amid a deepening global fuel crunch, raising concerns about potential physical shortages. The crisis is exacerbated by a lack of global refining capacity to compensate for lost supply from the Middle East and Russia.
Russia extended its ban on diesel exports until the end of October, while Ukrainian drone attacks on Russian refineries continue. The International Energy Agency reported that lost diesel output in the Middle East is three times higher than lost Russian supply. US refiners are already operating at maximum capacity.
Calls for a US ban on diesel exports have emerged, with Representative Tim Burchett tabling a bill and Senate Majority Leader John Thune backing the proposal. However, Energy Secretary Chris Wright and Interior Secretary Doug Burgum oppose the ban, warning it would backfire and worsen global shortages. The closure of many refineries over the past decade, partly due to the net-zero movement, has reduced global capacity.
Lukoil's Petrotel refinery in Romania has been idled since US sanctions were imposed, representing a loss of approximately 50,000 barrels daily of urgently needed refining capacity. The situation is compounded by depressed tanker traffic via the Strait of Hormuz and the potential for China and India to follow a US export ban, leading to unprecedented fuel shortages.