Diesel Market Faces Record Prices and Supply Tightness Ahead of Winter
Global diesel supply is facing further tightness ahead of winter due to limited spare refining capacity and disruptions in major oil-producing regions. According to industry executives, the global market is missing around 2 million barrels per day (mmbl/d) of Russian products and nearly 2 mmbbl/d from the Middle East due to the ongoing wars in Ukraine and Iran.
Vitol CEO Russell Hardy noted that while crude supply is stronger with the Middle East exporting around 9 mmbbl/d of crude and 1 mmbbl/d of products, insufficient refining capacity is preventing inventories from recovering. As a result, global stockpiles are nearing their lowest levels.
US diesel prices have recently hit record highs, while the diesel crack spread reached an intraday record of $108.02 per barrel. Phillips 66 Senior Vice President of Global Trading Mark Senn expects tight diesel inventories ahead of winter to support continued market strength.