Global diesel fuel supplies are expected to remain tight into next year, according to a Reuters report cited by Investing.com, because insufficient refining capacity is available to offset losses from Russian and Middle Eastern facilities.
Vitol Chief Executive Russell Hardy said at the Asia-Pacific Petroleum Conference that the market is missing about 2 million barrels a day from Russia and nearly 2 million barrels a day from the Middle East. Phillips 66 Senior Vice President for Global Trading Mark Senn said a winter season with diesel stocks in deficit could allow price strength to persist.
U.S. diesel prices recently reached record levels, topping $5.90 a gallon this month. The report said diesel and other fuel prices have risen worldwide as the supply squeeze reaches consumers, prompting governments to implement emergency relief measures such as fuel tax cuts.
The report said the lost supply is not expected to return quickly. Middle Eastern fuel exports are running at about 1 million barrels a day, forcing inventory draws with no immediate prospect of replenishment. Hardy said global stockpiles have been drawn down to near their bottom, remarks that echo comments from industry executives and energy analysts in recent months.
Russia has banned diesel exports while it repairs refinery damage from Ukrainian drone strikes and addresses a domestic fuel shortage. Middle Eastern refiners are also facing damage and are unable to move fuel through the Strait of Hormuz. Saudi Aramco’s Jizan refinery, with a capacity of 400,000 barrels a day, was attacked again this week by the Yemeni Houthis.
