Diesel Fuel Shortage Sends Oil Prices Soaring

The global oil market is experiencing an interesting situation where the world has enough crude oil but not enough diesel. This disparity is reflected in the recent data from Mitrade, which shows that WTI Crude Oil trades just under $91.00, up 1.6%, at seven-week highs.

Despite this increase in crude oil prices, distillate stocks, which cover diesel and heating fuel, sit about 14% below their five-year average. This shortage is particularly evident in the US, where gasoline stocks are also 17% below their record level.

The situation has led to a significant surge in diesel prices, with the New York Harbor diesel crack against the barrel reaching roughly $107 on September 1, compared to the $60s and low $70s during the record week of June 2022. Retail diesel prices have also reached an all-time high of $5.85 a gallon on September 4.

OPEC+ recently paused their output increase, leaving October production unchanged after six consecutive months of increases. This decision has had little impact on the market, as the spare capacity held by OPEC sits mostly inside the Gulf, and the barrels it declined to add would have had to leave through the Strait of Hormuz.